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Bulls Continue on the Loose in Brazil

Brazilian shares continued to roar higher on bullish sentiment, while profit-taking took a hold of the Argentine market. Lower oil prices and a strengthening U.S. market were also in focus.

Brazil’s benchmark Bovespa Index leapt 449.59 points, or 1.53%, while Argentina’s Merval Index eased 2.5 points, or 0.15%. Brazilian shares surged anew, on investor optimism after the central bank cut interest rates earlier in the week. Upbeat research also helped.

An investment bank raised its profitability forecast for the bank sector, citing higher loan growth estimates and increased operating efficiency.

Elsewhere, a major investment bank was positive on producers BHP Billion, Rio Tinto and Brazil’s CVRD, anticipating that surging China iron ore demand will probably drive contract prices higher again next year.

Also of note, Canada’s Canico Resource’s CEO stated he was “not persuaded” by CVRD’s takeover offer for the company. Analysts kept betting that a rival suitor would emerge for Canico.

In other comments, a large investment bank downgraded Telesp Celular Participações, Tele Centro Oeste Celular Participações and Celular CRT Participações to “neutral” from “buy” due to a drop in market share.

Mexican markets were closed today for a holiday, while U.S. counterparts rebounded from recent weakness, thanks to lower oil prices and despite soft economic data. The University of Michigan consumer sentiment index dropped to 76.9 in the preliminary September reading from 89.1 in August, below the anticipated decline to 85.

Also, the current account deficit shrank to US$ 195.7 billion in the second quarter from US$ 198.7 billion in the first period, compared to forecasts for a gap of US$ 193.0 billion.

Argentine stocks eased back on profit-taking, despite pleasing industrial production data. Indeed, August industrial output grew 7.6% year-on-year, or 1.6% from the prior month, well above estimates for an increase of 6.8%.

Thomson Financial Corporate Group – www.thomsonfinancial.com


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