* Brazil Bovespa gains 0.54 pct, Mexico IPC up 0.47 pct
SAO PAULO, Nov 7 (Reuters) - Latin American stocks rose onThursday after the European Central Bank surprised investors bycutting interest rates to a new record low, which could pushinvestors to seek higher returns in Mexican and South Americanmarkets.
Brazil's benchmark Bovespa stock index stemmed atwo-day slide while Mexico's IPC index rose its most inover a week.
The ECB cut its main refinancing rate to 0.25 percent onThursday in a bid to keep the euro zone's economic recovery ontrack. All but one of the 23 money market traders polled byReuters this week expected the ECB to remain on hold atThursday's meeting.
"The decision could contribute to an improvement in Europeaneconomic activity, which could help the world as a whole," saidJoao Pedro Brugger, an analyst with Leme Investimentos inFlorianopolis, Brazil, adding that the move "could push moneytowards higher-risk markets."
Steelmakers drove gains in Brazil's Bovespa index, whichrose 0.54 percent to 53,674.19, nearly erasing the previoussession's loss.
Usinas Siderurgicas de Minas Gerais SA, known asUsiminas, rose 3.8 percent, while rival steelmaker CompanhiaSiderurgica Nacional SA advanced 1.3 percent.
Shares of Eletropaulo Metropolitana Eletricidade de SãoPaulo SA, Brazil's largest power distributor, jumped7.7 percent after the company reported a better-than-expectedquarterly profit late Wednesday.
Shares of Telefonica Brasil SA slipped 2.2percent after the company posted a 17 percent drop in quarterlyearnings on Thursday, partly due to heavy spending on itsstruggling pay-TV business.
Preferred shares of Vale SA edged 0.3 percentlower the day after the world's top iron-ore miner saidthird-quarter net income more than doubled from a year earlier.
"The market expected Vale to deliver strong earnings and thestock advanced quite a bit recently because of that," saidRicardo Zeno, a partner with AZ investimentos in Rio de Janeiro."It's a case of buy the rumor, sell the fact."
Vale stock is up more than 12 percent since early October.
Mexico's IPC index rose 0.47 percent to 40,468.10.
Shares of conglomerate Alfa added 1.5 percent,while broadcaster Grupo Televisa climbed 0.6percent.
Chile's IPSA index edged higher, rising 0.17 percentto 3911.07.
Shares of LATAM Airlines added 0.8 percent,contributing most to the index's gains, while Banco SantanderChile rose 0.5 percent.
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