Weak US Job Market Gives Boost to Brazilian Stocks

Brazilian and Latin American stocks climbed, as weaker-than-expected U.S. jobs data fueled hopes that the U.S. Federal Reserve will pause its monetary tightening cycle.

Brazil’s Bovespa Index rose 193.88 points, or 0.51%. Mexico’s benchmark Bolsa index jumped 293.10 points, or 1.53%, while Argentina’s Merval index added 10.74 points, or 0.64%

Brazilian stocks advanced, building on gains of 3% in the previous session, as a smaller-than-expected rise in U.S. non-farm payrolls in May eased concerns that the Federal Reserve will continue its tightening cycle longer than expected to combat inflationary pressure.

A new poll showed Brazilian President Luiz Inácio Lula da Silva leading in his bid for a second four-year term by a wide margin. If elections were held today, Lula would win 49% of the vote against only 23% for the nearest contender, Geraldo Alckmin of the Social Democratic Party, according to the poll.

It was conducted by the Vox Populi polling organization and published by Carta Capital. Late Thursday, June 1st, another poll, published by the Ibope institute, showed Lula ahead of Alckmin by a margin of 43% to 19%. Brazilians go to the polls in October to choose a president, state governors and members of congress.

Elsewhere, Mexico’s IPC stock index rose after losing more than 900 points, or 4.6%, during the first three days of the week, as investors sold off emerging-market assets amid fears of rising U.S. interest rates.

Most major issues gained today, led by market heavyweight America Movil. Fixed-line phone company Telmex also ended the session higher, as did cement giant Cemex; bank Banorte rose as well.

A major investment bank reinstated coverage of Banorte on Thursday with a "buy" rating based on valuation. The investment bank said Banorte’s shares are attractively valued, trading at an estimated 2006 price to book value of two times, which is lower than the levels posted at year-end 2004 and 2005.

Argentine issues saw another day of mild gains, although volumes were very thin amid a dearth of local market news.

Thomson Financial – www.thomsonfinancial.com

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