Bargain Hunters Give Brazilian Market a Boost

Latin American stocks were mixed, with Brazilian shares climbing on bargain hunting following recent losses stemming from concerns about rising U.S. interest rates.

Meanwhile, Argentine issues dropped after the country’s central bank cautioned that it could more closely monitor the simultaneous buying and selling of securities.

Brazil’s Bovespa Index jumped 452.58 points, or 1.21%. Mexico’s benchmark Bolsa Index inched up 16.99 points, or 0.09%, while Argentina’s Merval Index fell 13.07 points, or 0.72%.

Brazilian stocks sank, as investors went in search of bargains following the market’s steep drop Tuesday, March 21, on concerns about rising U.S. Treasury yields and worries the U.S. Federal Reserve will continue its monetary tightening campaign longer than expected.

Shares have also been pressured recently by renewed political corruption worries. In testimony before a congressional investigative committee, witnesses recently linked Finance Minister Antonio Palocci to an alleged ring of lobbyists and political party leaders accused of bribery and campaign-finance violations.

Opposition leaders have been calling for his resignation. Meanwhile, Palocci has repeatedly denied any involvement in the alleged scandals. Earlier this week President Luiz Inacio Lula da Silva defended Palocci, saying he will stay on as Finance Minister.

In corporate news, oil giant Petrobras said it rejected a recent claim by Rio de Janeiro state that it owes the state government 800 million reais in special royalty arrears.

Telecom firm Telemar was in focus after the Brazilian securities commission (CVM) said it has approved an issue of non-convertible debentures worth 2.16 billion reais by Telemar. Last month, the company announced its intention to issue a debenture totaling just 1.6 billion reais, but it later decided to increase the offer due to strong demand.

Mexican shares managed to squeeze out small gains on the day toward the end of the session, coming back from intra-day losses. The market was closed yesterday for a holiday. Profit-taking was in full swing early on during today’s session, as the key IPC index has seen a string of consecutive gains, including two-straight record breaking sessions. Positive U.S. trading aided Mexico’s turnaround, as did strong domestic retail sales.

Meanwhile, investors are expecting the Bank of Mexico to continue to ease interest rates this coming Friday. Today, the National Statistics Institute, or Inegi, announced that retail sales grew 3% in January from a year ago and were up 2.04% from December on a seasonally-adjusted basis.

Argentina moved lower, despite some strong economic indicators in the form of the GDP and current account surplus. Investors instead focused on a warning from the central bank that it could monitor the simultaneous buying and selling of securities more closely.

On the economic front, the national statistics agency, or INDEC, said that the current account surplus for the fourth quarter of last year came in at US$ 1.482 billion, bringing the surplus for full-year 2005 to US$ 5.407 billion.

Elsewhere, INDEC said that January’s gross domestic product rose 9.1% from a year ago and was unchanged from December 2005. The year-over-year growth rate came in well above analyst expectations.

State-owned bank Banco de la Nacion SA announced that its past-due debts declined by 58% in 2005 to 988 million pesos. As of December 31, the bank’s total assets are 46.03 billion pesos, of which 2% account for past-due debts.

Thomson Financial – www.thomsonfinancial.com

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