By Carla Mozee

Major Latin American equity markets rose Thursday, with Brazilian shares extending gains after the government raised the amount of money it plans to spend on infrastructure projects.

Brazil's Bovespa bounced 2.4% higher to 41,108.65, marking its first close above the 41,000 level since Jan. 9.

Steel stocks were dominant advancers a day after Brazil hiked its infrastructure spending plan by 142.1 billion reals ($61.3 billion) to 646 billion reals. The program, known as PAC, runs through next year and is aimed at building and upgrading bridges, roads and dams.

Companhia Vale do Rio Doce (RIO) shares climbed for a second session as investors eyed the prospect for higher iron-ore demand from China after mining rival BHP Billiton (BHP) on Wednesday said there's been a draw down on iron ore stockpiles in China.

Bradesco said in a note Thursday that a 33% drop in iron ore shipments by rival miner BHP Billiton (BHP) in the second half of 2008 was smaller than the 31.3% quarter-over-quarter decline it expects for Vale.

"If Vale is selling in the [iron-ore] spot market, this is positive for the company as the drop in its sales volume in 2009 could be smaller than what we are assuming," wrote Bradesco analyst Raphael Biderman in a note.

"The ones that stand to lose are Indian and Chinese iron ore mines, as they are higher-cost producers."

Shares of steel maker Usiminas jumped 6.7%, CSN (SID) gained 3.3% and Gerdau (GGB) rose 2%.

Petrobras (PBR) shares rose 1.2%, aided by a higher finish for crude futures after a volatile session. Crude for March delivery rose 85 cents to $41.17 a barrel.

Rossi Residencial was a decliner in the session, down 5.3% after UBS Pactual downgraded the home builder's shares to neutral as its preliminary fourth-quarter results were "unexpectedly weak."

Mexico's IPC closed up 0.6% to 19,736.96 led by a 5.1% jump in shares of copper miner Grupo Mexico.

Market heavyweight America Movil (AMX) shares rose 0.9% and Telmex (TMX) rose 2.3%.

Mexico's currency, the peso, rose more than 1% to 14.322 against the greenback, after the country's central bank reportedly intervened on the foreign exchange market for the second session in a row. The bank step into the market on Wednesday for the first time since October after the peso dropped to a record low.

Banxico "has a sufficient arsenal" of more than $80 billion in foreign reserves "to continue intervening, which may put a cap on near-term MXN weakness," wrote analysts at RBC Capital Markets late Thursday.

The estimate for the central bank's intervention on Thursday ranged between $200 million to $300 million, said RBC.

Argentina's Merval jumped 2.7% to 1,105.15 and Chile's IPSA rose 1.4% to 2,627.08.

On Friday, investors will turn their attention to the U.S. Labor Department's unemployment report for January. Economists polled by MarketWatch expect a loss of at least 500,000 jobs.

The number of new claims for state unemployment benefits surged to their highest level since 1982, to 626,000, according to data released Thursday.