Brazil's industrial output rises more than expected in September

By Luana Maria Benedito

SAO PAULO, Nov 1 (Reuters) - Brazilian industrial production grew by more than expected in September, in another sign of economic strength which is likely to bolster bets on an acceleration in monetary tightening by the central bank at its meeting next week.

Industrial output rose by 1.1% in September from August , government statistics agency IBGE said on Friday, above the median estimate of a 0.9% increase in a Reuters poll.

Production in September grew 3.4% from a year earlier , above the 2.8% increase expected by economists.

IBGE said the most important positive influences in the period came from the oil and biofuels sector, with a 4.3% rise, and food products, up 2.3% on a monthly basis.

Repeated upside surprises in Brazil's economic data are fueling fears of increased inflationary pressures, particularly after fresh blockbuster labour data this week.

The country's central bank hiked its interest rate in September for the first time in more than two years, delivering a 25 basis-point increase to 10.75%.

Markets have now fully priced in an acceleration in monetary tightening at the central bank's rate-setting committee's meeting on Nov. 6, with a 98% chance of a 50 basis-point increase.

The remaining 2% probability is of an even larger increase of 75 basis points. (Reporting by Luana Maria Benedito; Editing by Alexander Smith)