UPDATE 1-Brazil says will not let real overvalue

RECIFE, Brazil, Sept 9 (Reuters) - Brazil's government on Thursday said it would take necessary steps to stop excessive appreciation of the country's currency, marking the latest sign it is ramping up intervention in foreign exchange markets.

Brazil is gearing up for what markets expect to be large inflows attracted by a massive stock offering from oil giant Petrobras, Finance Minister Guido Mantega said.

'We will take the necessary measures to prevent that there be an excessive appreciation (of the real),' Mantega said in a speech at an event in the northeastern city of Recife.

He made the comments after the central bank called its second auction on Thursday to buy U.S. dollars on the spot market.

The bank has stepped up intervention in foreign exchange markets after the real firmed 4.7 percent against the dollar since the end of June, putting pressure on the country's exporters.

Brazil's economy has been among the best performers in the world this year. Mantega said he expected the economy to continue to grow at a sustainable pace.

He saw average annual growth of 5.8 percent in coming years, after expansion of more than 7 percent in 2010.

A challenge for the next government following Oct. 3 elections will be to keep the current account balanced and keep investment compatible with the country's needs, he added.

(Reporting by Bruna Serra; Writing by Ana Nicolaci da Costa; Editing by Andrew Hay) Keywords: BRAZIL REAL/ ([e-mail]; Reuters Messaging: [e-mail]; [phone]) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.