Brazil shares firm on cautious Argentine hopes
Reuters, 07/13/2001 17:00
SAO PAULO, July 13 (Reuters) - Brazil's stock index edged cautiously higher for the third consecutive session on Friday on a combination of cautious optimism about the Argentine crisis and attractive prices in dollar terms.
The Sao Paulo Stock Exchange's benchmark Bovespa (INDEX:$BVSP.X) index gained 1.17 percent to 14,078.4 in a cautious day of trading marked by low turnover.
"The situation is very delicate," said Opportunity trader Antonio Machado.
Gainers outpaced decliners by 30 to 23 to leave the index 7.7 percent below where it began the year.
Telemar (SAO:TNLP4) (NYSE:TNE), Brazil's biggest fixed-line phone operator and the market heavyweight, supported the index with a 3.1 percent gain to 34.55 reais. It was the most traded share of the day.
Players said the seemingly endless weakening of the local real currency was also supporting stock prices by making the market cheaper in dollar terms.
Argentine optimism grew after Raul Alfonsin, a former president and current leader of the main party in the ruling coalition, said he supported the government's austerity plan designed to reduce the risk of economic collapse.
Traders had feared a repeat of the previous Argentine economy minister's failed efforts to push through spending cuts which led to his resignation and a crisis in confidence which hammered markets lower across Latin America.
But players said the country's chronic economic problems, which have hit emerging market across the world, were far from over and the market would remain tense next week.
Brazil's biggest private bank Bradesco (SAO:BBDC4) stood out among its peers with a 5.6 percent gain to 12 reais. Experts said the jump was due to a delayed bounce from recent lows and lower exposure to Argentina than its closest rival, Banco Itau (SAO:ITAU4).
Itau shares ended 2.1 percent firmer at 195 reais.
Traders said developments in Argentina would continue to dictate the market mood in the week ahead, although some said the depreciation of the local currency could attract foreign buyers by making the market attractive in dollar terms.
Argentina-inspired selling pushed the Brazilian real to its fourth consecutive record low on Friday at 2.590 per dollar.
The currency has lost about a quarter of its value so far this year on the back of the Argentine worries, and concerns about the impact of the U.S. economic slowdown, and Brazil's emergency energy rationing program. saopaulo.newsroom@reuters.com))
Copyright 2001, Reuters News Service |
