Accusation that the PT Was Bribing Congressmen Hurts Brazil

    Latin American shares mostly moved lower on the day, hurt by a plunge in Brazilian issues.

    Political turmoil continues to rock Brazil’s market, and investors fear governmental scandals will hinder economic reforms in the country. Argentine issues also slumped, while Mexican receipts posted negligible gains.


    Brazil’s benchmark Bovespa Index plunged 809.36 points, or 3.07%, while Mexico’s benchmark Bolsa Index inched up 4.04 points, or 0.03%. Argentina’s Merval Index receded 20.05 points, or 1.33%.


    Brazilian issues plunged on the day, amid continued political turmoil. In an interview with local paper Folha de S. Paulo over the weekend, Lower House deputy Roberto Jefferson indicated that President Luiz Inácio Lula da Silva’s Workers’ Party was paying lawmakers up to 30,000 reais (US$ 12,400) a month in exchange for votes in Congress.


    Within the auto sector, Anfavea, Brazil’s national automakers association, reported that domestic vehicle sales rose 3.9% in May from April, while production advanced 4.9%.


    Meanwhile, compared to May 2004, vehicle sales jumped 16%, while production surged 19% last month.


    On the corporate front, aircraft manufacturer Embraer SA bucked the broader market trend and moved higher on the session, after the firm said it received a US$ 950 million order from Europe’s Flybe for up to 26 Embraer-195 aircraft.


    Mexican stocks, meanwhile, returned most of their early gains, but still managed a positive finish. Local trading mirrored the U.S.’s flat session.


    In corporate reports, Cemex shares rebounded from Friday’s sell-off, when the firm announced it paid out dividends in the form of new shares issued at a discount.


    Also, a major brokerage house maintained a “market weight” weighting on Mexico, but still remains cautious about the country’s fundamentals.


    Brewing and bottling firm Femsa announced the completion of a US$ 700 million share offering, in which proceeds will be used to pay down debt.


    The world’s second largest Coca-Cola bottler sold 80.5 million of its BD units and 52.78 million B units.


    Argentine issues tumbled, as traders continue to digest last week’s completion of the country’s debt restructuring. Argentine issues advanced leading up to the debt swap’s completion.


    Smata, Argentina’s automotive workers union, today commenced a fresh round of strikes at several carmakers’ plants amid wage negotiations. Ford Motor and DaimlerChrysler confirmed strikes at their Argentine plants.


    Also, Latinaguas, an Argentine water utility, said that it signed a letter of intent with France’s Suez to purchase its holdings in Aguas Provinciales de Santa Fe.


    Elsewhere in Latin America, Chile’s economy grew 6.3% in April from the corresponding period a year ago, aided by increased production from manufacturers.


    Thomson Financial Corporate Group – www.thomsonfinancial.com


    PRNewswire

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