Tempered Optimism in Brazilian Market Rebound

    Brazilian stocks rose thanks to a rebound in Brazilian issues. Yesterday, investors had reacted harshly to an interest rate hike by Brazil’s central bank after market hours on Wednesday, but this Friday Brazil’s benchmark Bovespa Index recovered 208.40 points, or 0.88%.

    Brazilian shares climbed, in a technical rebound following recent declines. After this week saw the local Ibovespa index shed 5.3%, traders indicated that investors were following up some overdone selling, during which the Ibovespa hit two-month lows, with some bargain hunting.


    Still, optimism was tempered by concerns that that Brazil’s central bank will continue to hike interest rates as it struggles to bring inflation in line with its 2005 targets.


    The bank began raising rates in September, and with the benchmark Selic rate now at 18.25% per year, it is one of the highest in the world.


    On the corporate front, shares of mining giant CVRD rose following an acknowledgement the firm is seeking a price hike from clients of up to 90% for iron ore this year.


    Iron ore prices are negotiated every year between major producers and their foremost steelmaking clients. Strong Chinese demand has lifted iron ore prices, which surged nearly 19% in 2004 after a 10% rise in 2003.


    Low-cost Brazilian airline Gol Linhas Aereas Inteligentes SA announced plans to inaugurate flights to Bolivia in the first half of 2005, for its second international route.


    Gol began its first international route in December to Buenos Aires, Argentina. The carrier’s marketing and services vice president stated, “Gol’s successful operations in Argentina have proven that there is an opportunity to expand our business throughout South America.”


    Brazilian mobile phone operators recovered following indications that the price they get for receiving calls from fixed lines may increase in 2005, while many had been anticipating no change or even a decline.


    Turning to economic data, the private Getúlio Vargas Foundation reported that the Brazilian General Price Index rose 0.28% in the first 10 days of January, compared with a 0.63% increase in the corresponding period in December. The latest advance was shy of estimates for a gain between 0.30% and 0.50%.


    Thomson Financial Corporate Group
    www.thomsonfinancial.com


    PRNewswire

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