By Andre Soliani and Renato Andrade

Brazilian central bank President Henrique Meirelles cautioned investors not to load up on bets on the real as signs an “excess of euphoria” is building on the pace of the country’s economic recovery.

The real, the second-best performer among the 16 major currencies this year, slid from a seven-month high after Meirelles told reporters in Brasilia that he’s worried that market consensus on the strength of the economy is starting “to move at great speed.” The currency fell as much as 0.6 percent to 2.0462 before paring losses in the afternoon.

“Meirelles’s message was clear,” said Francisco Carvalho, head of currency trading in Sao Paulo at brokerage Liquidez Corretora. “Brazil has good chances of a recovery, but we can’t be euphoric from the outset.”

A jobless report today provided the latest evidence of the rebound taking hold in Latin America’s largest economy. The unemployment rate in Brazil’s six largest metropolitan areas fell to 8.9 percent in April, the first decline in four months, the government said. None of the 27 economists surveyed by Bloomberg forecast a rate below 9 percent.

While Meirelles said the economy is showing “very clear signs” of a recovery, he sought to temper investor optimism.

Sadia, Aracruz, Votorantim

“Our concern is with an excess of euphoria,” he said. “Investors and companies have in the past suffered big losses because of an excess of euphoria. We have alerted them to this risk.”

Sadia SA, the poultry exporter that was acquired by rival Perdigao SA this week, booked more than 3 billion reais of expenses related to derivatives in the second half after the global financial crisis pushed the real down 33 percent from a nine-year high in the last five months of 2008.

Aracruz Celulose SA, which Votorantim Celulose & Papel SA agreed to take over to form the world’s biggest pulp maker, reported $2.13 billion in derivatives losses last year. Votorantim Participacoes SA, a closely held producer of materials from aluminum to cement, spent 2.2 billion reais to settle wrong-way bets on currency derivatives last year.

The real has climbed 13.8 percent this year, the second- biggest advance among the 16 currencies most traded against the dollar after the South African rand, as prices on the country’s commodity exports rebounded and investor demand for emerging- market assets picked up. The real fell 0.1 percent today to 2.0351 per dollar, its first decline this week.

‘Stops to Listen’

“When you have the central bank president warning against euphoria, the market stops to listen,” said Reginaldo Galhardo, currency-trading manager at Treviso Corretora de Cambio in Sao Paulo.

Win Thin, senior currency strategist at Brown Brothers Harriman & Co. in New York, said in a note to clients that Meirelles’s comments are “a sure sign that policy makers in Brazil want to prevent excessive” real strength.

The central bank bought an undisclosed amount of dollars in the foreign-exchange market today, part of an effort it began on May 8 to slow the real’s gains and build international reserves.

Roberto Setubal, chief executive officer of Itau Unibanco Holding SA, Brazil’s biggest bank, said in an interview in New York that he expects the real to stabilize at about 2 per dollar before weakening to 2.51 by December. He said the country’s “economic numbers are really very strong.”

Stocks Decline

The economy has resumed growth after a short-lived “technical” recession sparked by the global crisis, Finance Minister Guido Mantega said this week. Growth slowed to 1.3 percent in the fourth quarter from 6.8 percent in the third quarter.

Yields on Brazil’s local currency bonds rose for the first time this week today. The yield on the Brazil’s zero-coupon bonds due January 2010 rose seven basis points, or 0.07 percentage points, to 9.4 percent, according to Banco Votorantim.

The benchmark Bovespa stock market index fell 2.4 percent, paring its gain this year to 33 percent. Trading surged to a record high this month, with daily volumes of an average 359,624 daily trades compared with a previous record of 337,448 trades in October, Carlos Kawall, chief financial officer for BM&F Bovespa SA, said in an interview yesterday.