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Rosy News in Brazil Keeps Market Humming Ahead

Latin American stocks gained ground, with Brazilian and Mexican shares getting a boost from upbeat local economic data. Strength on Wall Street amid optimism about U.S. earnings also fueled buying interest.

Brazil’s Bovespa Index added 85.19 points, or 0.22%. Mexico’s benchmark Bolsa Index climbed 129.87 points, or 0.66%, while Argentina’s Merval Index jumped 20.94 points, or 1.16%.

Brazilian stocks edged up, as upbeat industrial production figures added to optimism about the economy’s outlook. The Brazilian Census Bureau reported today that Brazil’s industrial output rose a seasonally adjusted 1.2% in February from January.

Analysts’ forecasts had ranged from a decline of 0.60% to growth of 0.90%. Output jumped 5.4% in February from the same month a year ago. Some analysts viewed February’s strong industrial output as a positive sign for Brazil’s gross domestic product this year.

Shares were also supported by growing confidence that the new finance minister Guido Mantega will continue the market-friendly economic policies of his predecessor Antonio Palocci.

Since his appointment last week, Mantega has repeatedly pledged to maintain fiscal and monetary austerity policies, reassuring investors that Brazil’s economy will continue to grow amid a climate of gradually falling interest rates and low inflation.

In corporate news, oil giant Petrobras’ board approved a 2006 capital budget of 26.2 billion reais at a general assembly. Petrobras earmarked 21.2 billion reais for direct investments, with 66% of the funds allocated to oil and natural gas. The company is working towards Brazil’s long-running goal of becoming a net exporter of crude in 2006.

Meanwhile, an influential investment bank started coverage of airline TAM with an "outperform" rating on its American Depositary Receipts.

"We rate the shares outperform relative to our EM (emerging market) universe due to leverage from a strong macro backdrop, its dominant share in an oligopolistic market and valuation," the bank said.

Mexico witnessed another record-breaking session, alongside soaring consumer confidence. Enthusiasm for U.S. shares, amid optimism for first- quarter earnings, also lent power to Mexico.

On the economic front, the National Statistics Institute, or Inegi, said that Mexico’s consumer confidence rose to its highest level in nearly five years this past March to 112.4 from 108.1 in February. The most recent figure compared to 105.7 in the corresponding period a year ago.

Home builder Ara intends to pay dividends and propose a stock split at its shareholder meeting on April 20. Ara will propose a dividend of 3.80 pesos a share.

A major investment bank issued a note on retailer Walmex. The brokerage expects the firm will post same-store sales growth of about 1% in March, as there will likely be a negative impact from Easter falling in April this year, compared to March last year.

Argentine shares strongly rebounded today, after recent lackluster trading. Meanwhile, local reports speculated that the presidents of Argentina and Uruguay may meet this week with the aim of ending tensions regarding pulp mills being built on the Uruguayan side of a river bordering the two countries.

Thomson Financial – www.thomsonfinancial.com

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