Monthly wholesale prices, led by a 3.11% surge in raw materials, jumped 2.27% compared to a 2.01% rise the previous month. Compared to June 2007, the IGP-M index rose 13.44%, the highest since October 2003 and more than triples the 3.89% reading of June 2007.

The IGP-M index has been growing faster than the government's benchmark IPCA (índice Nacional de Preços ao Consumidor Amplo – Extended Consumer Prices National Index) because of rising wholesale prices, which comprise 60% of the index. In the first six months of 2008, the IGP-M index has risen 6.82%, the fastest January-through-June rate since 1999, when the index surged 8.28%.

Brazilian consumers have been shielded from the worst of rising energy costs because of the government's decision to offset price increases for gasoline with lower taxes at the pump.

Consumer prices as measured by the IGP-M index jumped 0.89% in June from a month ago, pushing the 12-month rate up to 5.82%, within the government's target range of 4.5% plus or minus 2 percentage points.

Powered by higher consumer spending, the economy expanded 5.8% in the first quarter. Brazil's GDP has risen 5.76% in the last four quarters, its fastest pace since 1995.

Brazil's central bank has raised rates twice in three months from a record-low 11.25% to 12.25% in a bid to cool inflation. Market analysts anticipate the benchmark rate or Selic will reach 14.25% by the end of 2008.

Mercopress

Brazil’s Bovespa Index jumped 317.46 points, or 0.96%. Mexico’s benchmark Bolsa Index gained 142.10 points, or 0.80%, while Argentina’s Merval Index added 5.72 points, 0.37%.

Brazilian stocks gained ground after the IGP-M price index for 2005 showed inflation of only 1.21%, the lowest level since the index debuted in 1989. The report fueled hopes for further interest rate cuts.

Corporate news was scarce in the last trading day of the year in Brazil. Of note, the government’s antitrust bodies ruled that low-cost airline Gol can charge super-low promotional fares to expand market share, lifting a ban imposed by the local civil aviation department.

Meanwhile, Mexican issues rebounded from Wednesday’s declines, with investors consolidating their holdings, after the IPC kept breaking new records late in the year, amid economic optimism. U.S. counterparts, however, flipped-flopped for most of the session, ending lower, amid mixed economic data.

On the bright side, the U.S. Chicago PMI had a December reading of 61.5, down from 61.7 the prior month, but above expectations for 60.4.

However, U.S. existing home sales slipped by 1.7% in November, following a 2.7% decline in October. Economists had predicted a smaller drop of 1.3%.

Elsewhere, Argentine shares managed slight gains in late trading, after spending most of the session in negative territory. Many market players have remained on the sidelines in recent sessions, ahead of the holidays. The market will be closed tomorrow.

Of note, in local news, the trade surplus for November totaled US$ 522 million, the lowest level of the year, due to a significant slowdown in export growth.

Thomson Financial Corporate Group – www.thomsonfinancial.com

Meanwhile, U.S. markets were little changed, as investors await today’s U.S. Federal Reserve meeting on interest rates in which investors are hoping for some indication as to when the Fed will end its rate-tightening cycle.

Brazil’s benchmark Bovespa Index edged up 48.84 points, or 0.15%, while Argentina’s Merval Index receded 13.39 points, or 0.87%.

Brazilian issues edged higher, as investors believe the central bank may accelerate the pace of interest-rate cuts locally. The decision is set for Wednesday.

Meanwhile, São Paulo’s Fipe research institute announced that the consumer price index rose 0.18% in the four-week period ending December 7, compared to a 0.29% jump in November.

Separately, the General Price Index, or IGP-M, was 0.06% higher in the first 10 days of December, a slowdown from the 0.16% advance in the first 10 days of November.

On the corporate front, state-run oil firm Petrobras signed a contract with a consortium of firms regarding the construction of the processing unit of its new P-53 platform. Total investments for the project are estimated to be approximately US$ 950 million.

Meanwhile, Brasil Telecom filed a complaint with CVM against Banco Opportunity and all of its subsidiaries and directors regarding alleged improper management of the company.

Steelmaker Usiminas announced its intention to invest US$ 1.5 billion to improve its product mix. The firm is also studying the construction of a US$ 3 billion steelworks.

Despite closed Mexican markets, economic reports were still released. The Finance Ministry announced that industrial output rose 2.6% in October on the year, while advancing 0.66% from September on a seasonally adjusted basis. Meanwhile, manufacturing output advanced 2.7% in October from a year ago.

Meanwhile, Mexican Finance Minister Francisco Gil Diaz said that economic growth in the country was expected to be 3% by year end.

In research news, a major investment bank upgraded retailer Soriana to "overweight" from "equal weight," due to the firm’s attractive valuation.

Argentina moved lower on the session, amid a dearth of economic or corporate news items. Meanwhile, concerns over the country’s inflation level persist.

Thomson Financial – www.thomsonfinancial.com

Meanwhile, Brazil was not alone in pressuring the region, as Mexico and Argentina also tumbled. Brazil’s Bovespa Index plunged 953.03 points, or 3.25%. Mexico’s benchmark Bolsa Index tumbled 290.85 points, or 1.92%, while Argentina’s Merval Index receded 28.90 points, or 1.80%.

In the headlines, Brazil’s Central Bank cut the Selic base interest rate by 50 basis points to 19.0%. In other economic reports, the Getúlio Vargas Foundation said its Brazilian General Price index, or IGP-M, advanced 0.61% through October 20, compared to a decline in prices of 0.54% in the corresponding period last month.

Meanwhile, the IPCA consumer price index rose 0.35% in September, compared to a 0.17% advance in August. The most recent result brought inflation year-to-date to 3.94%, which is below the official 2005 target of 5.1%.

Meanwhile, paper and pulp producer Suzano said that its board authorized the firm’s plans to construct a new US$ 1.3 billion cellulose unit at its Mucuri plant in the northeastern state of Bahia.

The plant is scheduled to start production by the end of 2007 with an initial production capacity of 120,000 tons of cellulose that is anticipated to rise to 1 million tons of cellulose by 2009.

Mexican shares weakened alongside the demise in U.S. shares. U.S. leading indicators disappointed last month, which is not a healthy indicator for Mexico, as the country exports the vast bulk of its goods to its northern neighbor.

In U.S. economic reports, the Philly Fed index showed a rebound in manufacturing activity in the Philadelphia region in October, but also a rise in inflationary pressures. The prices received index, a component of the survey, shot up to 36.2 from 8.6, the highest level in a year.

Also, a gauge of future U.S. economic activity declined in September for the third month in a row, indicating slower growth for the rest of the year, the Conference Board said. Its index of leading economic indicators fell 0.7% in September, as the impact of the hurricanes in the Gulf began to be filter through.

On the earnings front, conglomerate Alfa SA said that asset sales and better operating performance within continuing operations helped boost the firm’s third-quarter net profit to 3.76 billion pesos from 1.14 billion pesos a year earlier.

Sales leapt to 17.4 billion pesos from 15.19 billion pesos, while operating profit was 1.69 billion pesos, compared to 1.39 billion pesos.

Elsewhere, Desc posted a third-quarter net loss of 14.1 million pesos, reversing a year-earlier net profit of 53.7 million pesos, as its sales declined to 5.85 billion pesos from 6.38 billion pesos. Nevertheless, operating profit rose 6.4% to 308 million pesos from 289 million pesos last year.

Meanwhile, Argentine stocks receded alongside the broader market. Investors remain cautious ahead of Sunday’s congressional elections.

In economic headlines, national statistics agency INDEC said that gross domestic product increased 8.9% on the year in August, while edging up 0.9% from July. For the eight months through August, growth was up 8.9%.

Thomson Financial Corporate Group – www.thomsonfinancial.com

Prices in Brazil, both wholesale and retail, are signaling stability, according to the Focus Bulletin, released February 9 by Brazil’s Central Bank. The bulletin represents a weekly survey of 100 market analysts and representatives of financial institutions with regard to the major tendencies of the national economy.

According to the bulletin, the Broad Consumer Price Index (IPCA) is expected to end the year up 5.75%, a tiny bit higher than the 5.74% forecast in last week’s analysis.

This prediction clashes with the projection made by the University of São Paulo’s Institute of Economic Research Foundation (Fipe), which lowered its Consumer Price Index (IPC-Fipe) inflation forecast from 5.47% last week to 5.39%.

On the wholesale front, the General Market Price Index (IGP-M) raised its prediction for this year’s inflation from 6.20% to 6.21%. The Focus survey continues to uphold a 7% cumulative increase in administrative price rates (fuel, electricity, telephone services, etc.).

The market expects that the Brazilian Institute of Geography and Statistics (IBGE) will announce that January’s increase in the IPCA will amount to 0.60%. The expectations for inflation in February remain the same as they were last week, 0.65%.

Translation: David Silberstein
Agência Brasil

Brazilian stocks closed with solid gains on a modest inflation reading. Brazil’s benchmark Bovespa Index jumped 255.30 points, or 1.00%. Stocks managed to brush off morning weakness to end firmly higher, after the central bank decided after yesterday’s close to raise the key Selic interest rate to 17.75%, a 50-basis point increase.

Investors are now wondering whether the central bank will continue to hike rates in 2005. Minutes from the monetary policy meeting will be released next week.

Brazil’s IGP-M inflation index, which closely tracks wholesale prices, rose 0.63% in the 20 days ended December. 10 compared with a 0.60% rise in the 20 days ended Nov. 10, the private Getúlio Vargas Foundation think tank said today. Analysts were expecting an increase of 0.75%.

Meanwhile, the Brazilian government has confirmed it will maintain its primary budget surplus target of 4.25% of gross domestic product for 2005, according to a letter to the International Monetary Fund. The country also said it remained committed to achieving the inflation targets established in June.

Separately, the IMF completed its review of Brazil’s economic reform program late yesterday and increased the size of the government’s IMF credit line by US$1.4 billion.

Turning to corporate news, Companhia Brasileira de Distribuição said late yesterday that its same-store sales rose 4.4% on the year in November, slowing from the double-digit year-on-year growth seen over the past few months. Total gross sales rose 18% to 1.29 billion reals, while net sales increased 15%.

Meanwhile, Varig, the troubled airline, fell after running up recently on optimism about a government bailout. Now, however, many investors doubt that the much-rumored bailout is really on the way.

Thomson Financial Corporate Group
www.thomsonfinancial.com

PRNewswire

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

PRNewswire