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Brazilian Stocks End Year in Celebratory Mood

Latin American stocks edged up in quiet trading, with the session being the last one of the year in select markets. Optimism about LatAm’s various economies continued to provide support. In particular, pleasing inflation data in Brazil helped the Bovespa lead the region.

Brazil’s Bovespa Index jumped 317.46 points, or 0.96%. Mexico’s benchmark Bolsa Index gained 142.10 points, or 0.80%, while Argentina’s Merval Index added 5.72 points, 0.37%.

Brazilian stocks gained ground after the IGP-M price index for 2005 showed inflation of only 1.21%, the lowest level since the index debuted in 1989. The report fueled hopes for further interest rate cuts.

Corporate news was scarce in the last trading day of the year in Brazil. Of note, the government’s antitrust bodies ruled that low-cost airline Gol can charge super-low promotional fares to expand market share, lifting a ban imposed by the local civil aviation department.

Meanwhile, Mexican issues rebounded from Wednesday’s declines, with investors consolidating their holdings, after the IPC kept breaking new records late in the year, amid economic optimism. U.S. counterparts, however, flipped-flopped for most of the session, ending lower, amid mixed economic data.

On the bright side, the U.S. Chicago PMI had a December reading of 61.5, down from 61.7 the prior month, but above expectations for 60.4.

However, U.S. existing home sales slipped by 1.7% in November, following a 2.7% decline in October. Economists had predicted a smaller drop of 1.3%.

Elsewhere, Argentine shares managed slight gains in late trading, after spending most of the session in negative territory. Many market players have remained on the sidelines in recent sessions, ahead of the holidays. The market will be closed tomorrow.

Of note, in local news, the trade surplus for November totaled US$ 522 million, the lowest level of the year, due to a significant slowdown in export growth.

Thomson Financial Corporate Group – www.thomsonfinancial.com

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