Brazil shares choppy on risk aversion, real firms

SAO PAULO, Feb 2 (BestGrowthStock) – Brazilian stocks rose in
choppy trading on Tuesday, as wariness over the outlook for the
global economic recovery remained even as investors bought
shares that had fallen over recent sessions.

Brazil’s benchmark Bovespa index (.BVSP: ) added 0.62 percent
to 66,986.65 after having risen the day before on news of an
energy merger.

The index had slumped more than 4.6 percent in January
after gaining about 83 percent in 2009.

“We’ve seen a certain risk aversion,” said Adriano Moreno,
a strategist with Futura Investimentos. “Nothing very serious,
but there’s still some fat in the market.”

Investors have shied away from riskier assets in recent
weeks on fears that U.S. proposals to restrict banks and talk
that China may rein in lending could curb global growth.

The index had moved higher in the morning, breaking through
the 67,000-point barrier and rising as high as 67,261.09.

“There was a lot of profit-taking,” over the past weeks
said Carlos Camacho, a fund manager with GAP Asset Management,
noting that that the drop in those previous sessions opened
space for the index to rise further.

Industrial output in Brazil contracted less than expected
in December from November, as the country’s finance minister,
Guido Mantega, said output could jump as much as 7 percent in
2010. [ID:nN02231458] and [ID:nSPG002728]

“(T)his deceleration does not change our diagnosis of
economic activity heating up, but it does point to a reduction
of industrial GDP’s contribution to overall GDP,” wrote
Santander analyst Luiza Betina Petroll Rodrigues in a note
emailed to clients.

Brazil’s currency, the real (BRBY: ), strengthened 1.18
percent to 1.839 per dollar as the greenback slid against a
basket of major currencies (.DXY: ).

On Monday, Goldman Sachs recommended investors go short in
the U.S. dollar against the Brazilian real, with a target of
1.75, noting that the Brazilian currency was among the hardest
hit globally during the sell-off in late January.

“It’s helping (the) real to rise today,” said Marcelo
Portilho, a strategist at CM Capital Markets, in Sao Paulo.

Among Brazilian stocks banks advanced. Heavyweight Itau
Unibanco (ITUB4.SA: ), the country’s largest private-sector bank
by assets, added 1.03 percent to 37.19 reais, Bradesco
(BBDC4.SA: ) rose nearly 2 percent to 32.47 reais and Banco do
Brasil (BBAS3.SA: ), Latin America’s largest bank by assets,
advanced 1.67 percent to 30.50 reais.

Cosan (CSAN3.SA: ) rose 0.47 percent to 23.69 reais. Those
shares soared 10.7 percent on Monday on news that Royal Dutch
Shell Plc (RDSa.L: ) was striking a deal with Brazil’s Cosan to
create a $21 billion a year ethanol joint venture.
[ID:nN0163545]

Shares of Telemar Norte Leste (TMAR5.SA: ), the operating unit
for Brazil’s largest phone group Oi, dropped 1.94 percent to
55.11 reais. Shares of Brazil’s largest phone group, Oi
(TNLP4.SA: ), lost 1.32 percent to 33.54 reais.

Telemar Norte Leste said on Tuesday it asked the country’s
securities regulator to halt the sale of 2.25 billion reais in
local bonds for up to 60 days. [ID:nN02241322]

Changes in yields on Brazilian interest rate futures
contracts (0#DIJ:: ) were mixed, with shorter-term contracts
ticking higher and longer-term edging lower.

The yield on the contract due January 2011 (DIJF1: ) inched
to 10.34 percent from 10.31 percent. The yield on the contract
due January 2012 (DIJF2: ) dipped to 11.6 percent from 11.64
percent.

Investors use the contracts to bet on trends in the
country’s benchmark interest rate, the Selic, currently at 8.75
percent.

Stock Research Tools

(Additional reporting by Silvio Cascione)
(Reporting by Luciana Lopez; Editing by Theodore d’Afflisio)

Brazil shares choppy on risk aversion, real firms