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UPDATE 1-Petrobras shares up as Bolsonaro vows not to meddle with fuel pricing

(Adds share performance, analyst comments)

SAO PAULO, Feb 5 (Reuters) - Brazil’s President Jair Bolsonaro said on Friday he won’t interfere with pricing policy set by Petrobras, sending shares of the state-controlled oil company up nearly 3%, but would instead seek to reduce prices via tax changes.

Bolsonaro’s comments were a relief to investors, who had feared a return to costly government interference in Petroleo Brasileiro SA, as the company is formally known.

Between 2011 and 2015, Petrobras was forced to sell fuel at a loss in an attempt to prop up the economy, costing the company billions of dollars.

Bolsonaro said he intended to present a bill to Brazil’s congress next week that would aim to change the way state fuel taxes are levied to increase their predictability by pegging them at or near refinery prices.

The government is also studying ways to reduce a federal tax on fuel, but at the moment it doesn’t have a way to compensate for the resulting decrease in tax revenue.

The cost of fuel has become a hot political issue in Brazil again as truckers threaten to strike over the rising prices.

Regis Cardoso, analyst at Credit Suisse, said in a note that the news was positive as “it lowers political risks” around the company.

Preferred shares of Petrobras rose 2.7% to 29.59 reais in mid-morning trading. (Reporting by Lisandra Paraguassu in Brasilia, Paula Laier and Tatiana Bautzer in Sao Paulo, writing by Stephen Eisenhammer; Editing by Chizu Nomiyama and Paul Simao)

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