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(Adds details about Brazil fuel market)
RIO DE JANEIRO, April 29 (Reuters) - Brazilian production of gasoline rose in March compared with the same month a year earlier while output of diesel fell, Brazil's petroleum regulator ANP said on its website on Friday.
Production of A-type gasoline, or gasoline without any ethanol added, rose 17 percent to 14.4 million barrels in March compared with the same month in 2015 while diesel output fell 3.7 percent to 24.6 million barrels in the month.
Demand for gasoline rose as the price of pure, hydrated ethanol was above the level where it is competitive with C-blend gasoline in flex-fuel cars in all five of Brazil's major regions, according to ANP price data for March.
Ethanol is starting to be competitive again in some areas as processing of a record cane crop advances.
Most cars built in Brazil can operate on any blend of gasoline and ethanol and demand for the fuels rises or falls based on their relative price. Ethanol needs to cost less than 70 percent of the price of gasoline to be competitive with gasoline.
Production of diesel, the most-used vehicle fuel in Brazil, continued to be harmed by the country's recession, the worst in decades. (Reporting by Jeb Blount and Marta Nogueira; Editing by Chizu Nomiyama)