Hurricane Katrina Spares Brazilian Bulls

Latin American markets were mixed to higher on the day, as strength in Brazil contended with a downturn in Mexico. Argentine shares were also robust. Investors’ main focus for the day was Hurricane Katrina and its potential impact on oil operations in the Gulf of Mexico.

Oil prices briefly topped US$ 70 a barrel in overnight trading, before pulling back as the hurricane was downgraded to a Category 1 storm. U.S. markets enjoyed a positive session, as crude oil prices receded from their earlier highs.

Brazil’s benchmark Bovespa Index leapt 290.22 points, or 1.07%, while Mexico’s benchmark Bolsa Index tumbled 117.64 points, or 0.81%. Argentina’s Merval Index jumped 19.24 points, or 1.23%.

Brazilian shares turned higher, following weakness last Friday. Positively impacting stocks was the central bank’s weekly survey that showed economists lowering their 2005 inflation expectations for the 15th-consecutive week.

Analysts also maintained their targets for the reference Selic interest rate to fall to 18.0% by the end of 2005 from its current stance at 19.75%.

Petrobras announced that it did not believe that Hurricane Katrina caused any major damage to the oil industry. Separately, according to Portuguese reports, Portugal’s GalpEnergia identified Petrobras as a strong candidate to buy a stake in the firm.

Within the financial group, Banco Bradesco signed agreements to provide consumer credit services to clients of EletroZema, Grupo Ponte Irmãos and Dismar. Separately, a major investment bank upgraded Unibanco to "hold" from "sell."

Elsewhere, a federal labor court in Rio de Janeiro suspended the sale of Varig’s cargo unit, VarigLog, to a U.S. private equity firm at the request of the National Federation of Civil Aviation Workers, or Fentac. The group believes that the sale would hurt workers.

Mexican issues, meanwhile, added to recent losses. Bouts of profit taking have ensued recently, since the IPC index reached a record high close in mid August.

Cement manufacturer Cemex was active, after the Wall Street Journal said the U.S. and Mexico may soon reach an agreement on import duties on cement from Mexico, as a cement shortage threatens U.S. supplies.

Elsewhere, Grupo Industrial Maseca, a corn miller, announced its intentions to delist its American Depositary Receipts from the New York Stock Exchange, as the benefits of maintaining the listing no longer outweigh the costs.

Argentine stocks enjoyed a positive session, as investors brushed aside concerns over Hurricane Katrina. In corporate reports, Alpargatas SAIC, a textiles manufacturer, received a November 18 deadline from a local judge to get creditor approval for its US$600 million debt restructuring offer.

Thomson Financial Corporate Group – www.thomsonfinancial.com

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