Brazil shrs close up 6.65 pct on U.S. Fed rate cut
Reuters, Thursday, October 15, 1998 at 17:17
SAO PAULO, Oct 15 (Reuters) - Brazilian shares surged in
the last hour of trading to close 6.65 percent higher after the
U.S. Federal Reserve cut two key interest rates by a quarter
percentage point each, traders said.
"I don't think the cut could come at a better time," said a
trader at a local brokerage. "It's going to help the market
here, which had gotten very pessimistic, a lot."
Sao Paulo's key Bovespa (INDEX:$BVSP.X) rose to 6,874 points as
shares on Wall Street closed up a sharp 4.15 percent. Brazil's
benchmark C-Bond foreign debt also jumped more than 5 percent
in afternoon trade to 65.50.
Trading was strong with 500.1 million reais of shares
trading hands, up from average daily trading of less than 400
million reais in recent sessions.
The Fed unexpectedly cut the federal funds overnight bank
lending rate to 5 percent from 5.25 percent. It also cut the
discount rate, at which the Fed provides emergency loans to
commercial banks, to 4.75 percent.
While the move is not expected to send investors rushing
back to Brazil to the high yields there, it could calm markets,
giving the Brazilian government a window to hammer out tough
fiscal measures aimed at fending off the global crisis.
Telecommunications shares led the gains. Telebras preferred
receipts (SAO:RCTB40), the Bovespa's benchmark security, jumped
8.42 percent to close at 89.99 reais. Embratel preferred
(SAO:EBTP4) surged 21.79 percent to close at 19 reais after
suffering big losses the day before.
Among other blue-chips, Petrobras preferred (SAO:PETR4)
closed up 5.75 percent at 138 reais. Energy company Eletrobras
preferred (SAO:ELET6) ended up 4.94 percent at 25.50 reais and
iron ore miner Cia Vale do Rio Doce preferred (SAO:VALE5) closed
up 1.17 percent at 17.30 reais.
shasta.darlington@reuters.com))
Copyright 1998, Reuters News Service |
