Bolivia and Corruption Crises Keep Market Going South in Brazil

Latin American shares traded in various directions on the day. Brazil tumbled for a fourth-straight session on mounting political worries.

Mexico, however, turned higher, following a positive session in the U.S. Meanwhile, Argentina posted steep declines, after the government placed new restrictions on foreign capital inflows.


Brazil’s benchmark Bovespa Index slumped 217.95 points, or 0.88%, while Mexico’s benchmark Bolsa Index surged 122.62 points, or 0.94%. Argentina’s Merval Index tumbled 38.33 points, or 2.57%.


Helping to boost U.S. market sentiment, Federal Reserve Chairman Alan Greenspan repeated current Federal Open Market Committee language of raising interest rates at a measured pace and added that he was not concerned about a recent soft patch in U.S. economic data.


Meanwhile, as Brazil’s political tensions continued to mount, stocks headed south once again.


In today’s press reports, Labor Party congressman Roberto Jefferson, who claimed this past Monday that the governing Workers’ Party was bribing lawmakers for congressional votes, reportedly has tape recordings to back up his allegations.


Also, the congressional investigation into related abuses at the Post Office was set to kick off today.


Turning to corporate reports, state-run oil firm Petrobras SA said that it is carefully monitoring the political demonstrations in Bolivia.


Petrobras said that a liquid-hydrocarbons terminal used by the firm is being occupied by Bolivian farmers that are demanding the nationalization of Bolivia’s oil and gas industry.


Petrobras has invested nearly US$ 1 billion in the country since it began operations there in 1996.


On the deal front, CVRD unit Caemi is set to sell its stake in Canada’s Quebec Cartier Mining Company for US$ 120 million.


In other deal reports, mining and industrial firm Grupo Votorantim said that it is in the final stages of talks to sell Votocel, one of its packaging units, for up to US$ 140 million, according to financial paper Valor Econômico.


Separately, Spain’s La Caixa completed the sale of its 3.12% stake in Banco Itaú for 558 million reais.


Mexican issues were more upbeat on the session, as some traders are seeing fund inflows amid Brazil’s political turmoil. Mexican shares were also aided by upbeat U.S. market sentiment.


In economic headlines, the country’s Consumer Price Index declined 0.25% in May from April, after posting the same decrease in May 2004. Annual inflation remains at 4.60%.


The Bank of Mexico said that government subsidies for electricity in the northern part of the country contributed to the declining CPI.


Argentine issues suffered, after Economy Minister Roberto Lavagna announced a freeze on 30% of incoming foreign capital inflows that will take effect on Friday.


Separately, according to Torcuato Di Tella University, consumer confidence declined for a third-straight month in June, with the index falling 1.5% to 50.63 from last month.


On the corporate front, Spanish-Argentine oil and energy firm Repsol YPF SA reported that the political unrest in Bolivia has cut its production in that country by 3,500 barrels of oil equivalent a day, representing 0.3% of the company’s total production.


Thomson Financial Corporate Group – www.thomsonfinancial.com


PRNewswire

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