Confidence Fever Leads Market to Record High in Brazil

Brazilian stocks climbed, with markets establishing record closing highs. Confidence in the domestic economy and a surge in U.S. stocks provided momentum. Brazil’s benchmark Bovespa Index leapt 353.09 points, or 1.38%.

Brazil’s market rallied to a fresh record closing high, driven by overseas fund buying. Traders explained that overseas investors were already building their 2005 Brazilian portfolios, preferring the country’s blue-chip shares, with favorable prospects for Brazil’s economy next year attracting such investments.

On the economic front, renewed inflation concerns were largely overlooked. Brazil’s IBGE statistics institute reported that the IPCA Broad Consumer Price Index surged 0.84% in the month to December 15, accelerating from a 0.63% increase in the month to mid-November, primarily due to higher fuel prices.

Most economists had anticipated an increase nearer to 0.70%. The higher-than- estimated reading for the mid-month added to speculation Brazil’s Central Bank may opt to hike interest rates again in January.

Additionally, investors continue to await the publication of the Central Bank’s minutes from its December meeting. Traders expect equity trading volume to be light today and tomorrow ahead of the release early Thursday of the minutes.

Turning to corporate news, Petrobras said its board had approved the acquisition of Uruguayan natural gas distributor Conecta SA for US$ 3.2 million. It is the Brazilian state-oil company’s first activity in Uruguay, adding to Petrobras’ swift international expansion.

Thomson Financial Corporate Group



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