Brazil’s Bovespa Index dropped 635.10 points, or 1.55%. Mexico’s benchmark Bolsa Index fell 280.37 points, or 1.31%, while Argentina’s Merval Index lost 50.96 points, or 2.74%.

Brazilian stocks sank, as investors continued to take profits amid growing concerns that the recent surge in oil prices will fuel U.S. inflation, forcing the U.S. Federal Reserve to continue raising interest rates.

Data released today showed that U.S. import prices leapt a bigger-than-expected 2.1% in April, driven by an 11.5% surge in the price of imported petroleum. Also, U.S. Treasury yields rose today, reflecting expectations for higher interest rates.

In local economic news, inflation as measured by Brazil’s General Price Index (IGP-M) rose 0.21% in the first 10 days of May compared with a drop of 0.43% in the first 10 days of April.

On the corporate front, Telemar said yesterday that it plans to appoint Luiz Eduardo Falco as its chief executive effective July 1. He will replace Ronaldo Iabrudi.

Meanwhile, grocer Companhia Brasileira de Distribuição (CBD) said its April same-store sales continued reflect the impact of declining food prices and caution from consumers. CBD will release its April same-store sales results Wednesday.

Brazilian steel holding company Arcelor Brasil said its first-quarter net profit plunged 79% from a year earlier due to sluggish demand and lower export prices.

Also reporting, technology group Totvs SA posted a first-quarter net loss of 9.8 million reais, reversing a year-earlier net profit of 5.5 million reais.

Elsewhere, Mexican issues fell for a third consecutive session as investors continued taking profits amid a sell-off on Wall Street today.

In the news, media group Televisa said it is working with several private-equity investment firms to prepare a bid for U.S. Spanish-language broadcaster Univision.

Argentine shares followed regional equities lower amid concerns about mounting global inflation and higher U.S. interest rates. In local developments, steelmaker Acindar posted a first-quarter net profit of 222.8 million pesos, up sharply from 152.5 million pesos a year earlier.

Thomson Financial – www.thomsonfinancial.com

Meanwhile, Argentine issues dropped after the country’s central bank cautioned that it could more closely monitor the simultaneous buying and selling of securities.

Brazil’s Bovespa Index jumped 452.58 points, or 1.21%. Mexico’s benchmark Bolsa Index inched up 16.99 points, or 0.09%, while Argentina’s Merval Index fell 13.07 points, or 0.72%.

Brazilian stocks sank, as investors went in search of bargains following the market’s steep drop Tuesday, March 21, on concerns about rising U.S. Treasury yields and worries the U.S. Federal Reserve will continue its monetary tightening campaign longer than expected.

Shares have also been pressured recently by renewed political corruption worries. In testimony before a congressional investigative committee, witnesses recently linked Finance Minister Antonio Palocci to an alleged ring of lobbyists and political party leaders accused of bribery and campaign-finance violations.

Opposition leaders have been calling for his resignation. Meanwhile, Palocci has repeatedly denied any involvement in the alleged scandals. Earlier this week President Luiz Inacio Lula da Silva defended Palocci, saying he will stay on as Finance Minister.

In corporate news, oil giant Petrobras said it rejected a recent claim by Rio de Janeiro state that it owes the state government 800 million reais in special royalty arrears.

Telecom firm Telemar was in focus after the Brazilian securities commission (CVM) said it has approved an issue of non-convertible debentures worth 2.16 billion reais by Telemar. Last month, the company announced its intention to issue a debenture totaling just 1.6 billion reais, but it later decided to increase the offer due to strong demand.

Mexican shares managed to squeeze out small gains on the day toward the end of the session, coming back from intra-day losses. The market was closed yesterday for a holiday. Profit-taking was in full swing early on during today’s session, as the key IPC index has seen a string of consecutive gains, including two-straight record breaking sessions. Positive U.S. trading aided Mexico’s turnaround, as did strong domestic retail sales.

Meanwhile, investors are expecting the Bank of Mexico to continue to ease interest rates this coming Friday. Today, the National Statistics Institute, or Inegi, announced that retail sales grew 3% in January from a year ago and were up 2.04% from December on a seasonally-adjusted basis.

Argentina moved lower, despite some strong economic indicators in the form of the GDP and current account surplus. Investors instead focused on a warning from the central bank that it could monitor the simultaneous buying and selling of securities more closely.

On the economic front, the national statistics agency, or INDEC, said that the current account surplus for the fourth quarter of last year came in at US$ 1.482 billion, bringing the surplus for full-year 2005 to US$ 5.407 billion.

Elsewhere, INDEC said that January’s gross domestic product rose 9.1% from a year ago and was unchanged from December 2005. The year-over-year growth rate came in well above analyst expectations.

State-owned bank Banco de la Nacion SA announced that its past-due debts declined by 58% in 2005 to 988 million pesos. As of December 31, the bank’s total assets are 46.03 billion pesos, of which 2% account for past-due debts.

Thomson Financial – www.thomsonfinancial.com

Brazilian shares ebbed, despite signs of easing inflationary fears and strengthening in the U.S. dollar. Brazilian issues pulled back on profit taking after closing last week at an all-time high. Brazil’s benchmark Bovespa Index slid 143.06 points, or 0.57%.

In economic headlines, a senior official at the World Bank said that he sees Latin America’s regional economy growing more than 5% this year, above the bank’s latest official estimate of a 4.7% expansion.

Guillermo Perry, chief economist for Latin America at the World Bank, stated that robust global demand for raw materials from Latin American and a recovery in regional business investment are spurring growth after three years of economic stagnation.

Perry also said Latin America’s regional economy should expand 4% to 4.5% in 2005.

Brazilian shares declined, after the local market reached an all-time closing high on Friday, as profit-taking outweighed projections for a decline in inflation.

Investors largely shrugged off a weekly central bank survey indicating that 100 economists and analysts polled expect Brazil’s IPCA consumer price index, which the bank watches when setting monetary policy, to rise 5.8% in 2005, down from a 5.9% increase forecast last week.

The lower inflation outlook could reduce concerns that the central bank will continue for many months, or even accelerate, rate hikes in its base interest rate. Still, Brazil’s macroeconomic outlook remains favorable.

Also, Brazil’s wholesale-heavy IGP-M inflation index gained 0.82% in November, following a 0.39% rise in October. The November results were in line with forecasts. Tomorrow, Brazil’s government will report third-quarter gross domestic product growth.

Turning to the corporate front, Telemar Norte Leste Participações rose. Friday evening, the firm announced plans to spin off and list separately its Contax call center.

Thomson Financial Corporate Group
www.thomsonfinancial.com

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