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UPDATE 1-Alcoa to cut capacity at two aluminum smelters in Brazil

* To cut 147,000 metric tons of capacity at Brazil smelters

* Aluminum prices rise 1.5 pct to $1,763.25/ton on LME

(Adds details, graphic, aluminum prices)

March 28 (Reuters) - Alcoa Inc, the biggest U.S. aluminum producer, said it would cut 147,000 metric tons of capacity at two aluminum smelters in Brazil as increased costs and low prices have made the plants uncompetitive.

Benchmark aluminum prices rose about 1.5 percent to a session high of $1,763.25 per ton on the London Metal Exchange on Friday, after Alcoa's announcement.

Many companies, including the world's biggest aluminum producer Rusal and rival Rio Tinto Ltd, have shut loss-making plants as Chinese supplies flood the market and energy costs rise.

The price of aluminum - used in the aerospace, construction and automotive sectors - has fallen about 37 percent since May 2011, when it touched a high of $2,800 per tonne.

Alcoa said last month that it would close its 50-year-old Point Henry aluminum smelter and two rolling mills in Australia.

The company's smelting capacity cuts were deeper than the 460,000 metric tons it placed under review last May.

Alcoa's total smelting capacity would fall by about 800,000 metric tons, or 21 percent, once all announced curtailments and closures are complete.

The capacity cuts at Sao Luis and Pocos de Caldas smelters are expected to be complete by the end of May, the company said.

Alcoa said it expected to take after-tax restructuring charges of $40 million to $50 million, or 4-5 cents per share, in the first quarter ending March 31 due to the capacity cuts.

The company's shares were little changed at $12.60 in early trading on the New York Stock Exchange.

(Reporting by Swetha Gopinath in Bangalore; Editing by Kirti Pandey)