Brazil stocks rise on commodities, real firms

(Updates to close)

SAO PAULO, Feb 4 (Reuters) - Brazilian stocks rose on Wednesday, led by energy and mining stocks and following world stocks higher, while the country's currency strengthened against the U.S. dollar.

The Bovespa stock index .BVSP of the Sao Paulo stock exchange closed 0.96 percent up at 40,129.04 points, after rising as much as 4 percent during the session.

The world's top iron ore producer, Vale (VALE5.SA: Quote, Profile, Research), rallied as analysts bet price cuts it is expected to make for its iron ore would be less severe than previously thought after rival BHP Billiton (BHP.AX: Quote, Profile, Research) said China's stockpiles had shrunk.

Vale gained 3.6 percent to 30.05 reais after a 4.5 percent jump in the previous session.

Chinese and Japanese steel mills are locked in talks with Vale and other top miners to set the next annual benchmark price for supplies, and are pushing for a cut of around 45 percent.

"Markets believe Vale will have to cut iron ore prices to China by less than expected," said Roberto Alem, an economist at M2 Investimentos brokerage in Sao Paulo.

Energy company Petrobras (PETR4.SA: Quote, Profile, Research), the heaviest weighted in the Bovespa index, rose 0.5 percent to 25.70 reais.

Petrobras also announced plans to sell 10-year bonds on the international capital markets.