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Brazil Takes Its Profit and Runs

Latin American markets ebbed across the board, as investors cashed in on recent gains. Brazil, which has been a market leader this week in the region, succumbed to profit-taking, as did Argentina.

Meanwhile, the Mexican market broke its winning streak, partly due to pressure from America Movil.


Brazil’s benchmark Bovespa Index ebbed 74.47 points, or 0.28%, while Mexico’s benchmark Bolsa Index slipped 61.70 points, or 0.42%. Argentina’s Merval Index slumped 27.28 points, or 1.78%.


Brazilian shares returned early session gains and moved lower on the day. A slide in crude oil prices had initially aided investor sentiment, as Brazil is a net importer of oil.


The U.S. Energy Department noted in its latest weekly inventory report that crude stocks rose by 196,000 barrels, whereas analysts expected a decline. Nevertheless, oil prices remain near US$ 61 a barrel.


In economic reports, São Paulo’s Fipe research institute said that the consumer price index in São Paulo rose 0.30% in July, compared to a 0.20% decline in June.


Among the day’s financial releases, steelmaker Gerdau SA said that its second-quarter net profit edged up to 892.6 million reais from 873.3 million reais a year ago. Net revenue totaled 5.435 billion reais, up from 5.299 billion reais last year.


Elsewhere, petrochemicals firm Braskem swung to a second-quarter net profit of 428 million reais, reversing a year-earlier loss of 302 million reais. A reduction of net debt and improvements to its operational performance aided the most recently reported results. Net revenue rose to 2.9 billion reais from 2.7 billion reais, while EBITDA slipped to 570 million reais from 615 million reais.


Airlines were active on research reports. A major investment bank upgraded Gol to “outperform” from “market perform.” Separately, a different investment house initiated coverage on TAM Airlines with a “buy” rating.


Mexican shares receded, after the benchmark IPC Index reached record highs for three consecutive sessions. Mexican issues also did not receive encouragement from U.S. markets, which endured a lackluster session. The U.S. is a key trading partner with Mexico.


In deal headlines, wireless phone firm America Movil SA confirmed its purchase of Chile’s Smartcom from Spain’s Endesa for US$ 472 million.


Turning to economic reports, the National Statistics Institute, or Inegi, said that the consumer confidence index rose to 102.2 in July from 100.7 in June. The year-ago figure was 96.0.


Elsewhere, fast-food operator Alsea SA agreed to buy an approximate 22% stake in SC de Mexico, whose Cafe Sirena unit manages Starbucks in Mexico.


Argentine stocks slid lower on the day, mostly due to profit-taking in the wake of strong market gains. The national statistics agency, or INDEC, said that the consumer price index leapt 1.0% in July from the prior month, marking a 9.6% increase on the year. Still, the July reading landed beneath analyst expectations. Prices in the entertainment sector were notably higher.


In other news, the International Monetary Fund and Argentina are currently discussing “the next steps for the next few months” to reach a new loan accord, according to an IMF official.


Thomson Financial Corporate Group – www.thomsonfinancial.com

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