A retreat in oil prices has eased Brazil's near-term inflation fears and supports another rate cut, but analysts warn deeper pressures still cloud the path.

Brazil's Ibovespa closed at 174,070 points and the real firmed to 5.1686 per dollar on July 3 as weak factory data fuelled Selic rate-cut bets.

Brazil's inflation is easing for a second month and the central bank has resumed cutting the Selic rate, a shift that matters for the real and investors.