Brazil stocks, real in choppy trade on euro fears

SAO PAULO, May 24 (BestGrowthStock) – Brazilian stocks and the
country’s currency saw choppy trading on Monday, as investors
received more news that revived worries a euro zone debt crisis
could drag on global economic growth for some time.

The Bank of Spain said on Saturday it had taken over the
running of Spanish savings bank CajaSur after its planned
merger with another of the country’s small lenders failed.
[ID:nLDE64L007]

The benchmark Bovespa stock index (.BVSP: ) rose 0.40 percent
to 60,501.83 in mid-morning trade, dipping into and out of
negative territory through the early session.

The index gained 3.55 percent on Friday, snapping a
six-session losing streak on the back of worries about euro
zone economies. But the index proved unable to sustain that
momentum on Monday.

“The impression we have is that the bounce on Friday was
just Friday,” said Adriano Moreno, a strategist with Futura
Investimentos. “The worries about Europe aren’t going away too
soon.”

Fears over the fiscal health of heavily-indebted European
nations, including Portugal, Spain and Greece, among others,
have dragged on global markets for weeks, spooking investors
into dumping riskier assets around the world.

Even news pointing to a possible firming of a recovery in
the U.S. economy — the world’s largest — did little to
relieve the pressure on markets on Monday. Sales of previously
owned U.S. homes rose more than expected in April to a five
month high. [ID:nN24249105]

“Europe is going to dominate for awhile,” Moreno said.

Brazil’s currency, the real (BRBY: ), firmed 0.64 percent to
1.849 per dollar, after having strengthened nearly 1 percent
against the greenback earlier in the morning.

On the Bovespa, shares of state-controlled energy giant
Petrobras (PETR4.SA: ), the most heavily-weighted in the index,
led gains, moving up 0.29 percent to 27.46 reais as crude oil
(CLc1: ) advanced 0.53 percent.

Fellow oil company OGX (OGXP3.SA: ) climbed 1.91 percent to
15.51 reais. The company on Monday said that it had found signs
of hydrocarbons and natural gas in shallow waters in the Santos
basin. [ID:nN24251844]

Steelmakers also rose. Usiminas (USIM5.SA: ) added 1.06
percent to 45.88 reais, CSN (CSNA3.SA: ) gained 0.38 percent to
26.58 reais and Gerdau (GGBR4.SA: ) climbed 0.76 percent to 23.97
reais.

Yields on Brazilian interest rate futures contracts
(0#DIJ:: ) changed little as investors kept an eye on a central
bank survey of local economists expecting inflation to end the
year above the center of a government target.

The yield on the contract due January 2011 (DIJF1: ) ticked
up to 10.94 percent from 10.93 percent. The yield on the
contract due January 2012 (DIJF2: ) edged up to 12.04 percent
from 12.01 percent.

Both were among the most highly-traded contracts of the
morning.

Local economists increased their forecasts for 2010
inflation in Brazil for an 18th straight week, to 5.67 percent
from 5.54 percent a week earlier, according to a central bank
weekly survey released on Monday. [ID:nN24247176]

The central bank’s inflation target for the year is 4.5
percent, plus or minus 2 percentage points.

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(Reporting by Luciana Lopez; Editing by Theodore d’Afflisio)

Brazil stocks, real in choppy trade on euro fears