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Stocks Go South in Brazil With Foreigners Redirecting Money to US

Brazilian stocks  sank into the red today, as investors reacted to a continued drop in  U.S. Treasuries prices that pushed the yield on the 10-year note above 5%. Brazil’s Bovespa Index fell 345.28 points, or 0.90%.

Meanwhile, markets in Mexico and Argentina were closed. All Latin  American markets, including Brazil, will be closed this Friday, April 14, in observance of  Good Friday.

Weighing on Brazilian equities, long-term U.S. Treasuries prices  extended recent losses, pushing the yield on the 10-year note above 5% for  the first time since June 2002.

Prices were driven lower by heightened  expectations for continued interest-rate hikes by the Federal Reserve  after data released today showed a bigger rise in U.S. retail sales in  March. Higher U.S. rates could, in turn, divert funds away from emerging  markets like Brazil.

In corporate news, airline TAM was in focus after the air carrier  raised 1.559 billion reais Wednesday, April 12, from its global offering of shares on  the Brazilian Stock Exchange. The money raised exceeded the 1.495  billion Reais initially announced, due to strong demand.

Meanwhile, paper and pulp producer Votorantim posted a first-quarter  net profit of 159 million reais, up 10% from 145 million reais a year  earlier. However, net operating revenue fell 2%.

In the same sector, a major investment bank raised its price target for  paper and pulp producer Aracruz to US$ 52 from US$ 43, citing "a  stronger than expected scenario given better than expected momentum in  pricing."

Elsewhere, online retailer Submarino SA said it raised 812.8 million  reais from an offering of shares on São Paulo’s Bovespa Stock Exchange.

Technology group Totvs SA said it purchased local rival RM Sistemas SA  for 206 million reais. The acquisition came a month after Totvs raised  460 million reais from its initial public offering of shares on the  Bovespa.

Supermarket chain Companhia Brasileira de Distribuição (CBD) said its  nominal same-store sales dropped 11.5% in March from a year earlier.

Thomson Financial – www.thomsonfinancial.com

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