Brazil stocks rise after 3-session dip; real firms

SAO PAULO, April 20 (BestGrowthStock) – Brazilian stocks rose in
early trading on Tuesday, helped by stronger commodities after
three sessions of losses.

Brazil’s benchmark Bovespa stock index (.BVSP: ) added 0.36
percent to 69,343.49 in morning trade, after having lost 2.7
percent from its April 14 close through Monday’s close.

Key U.S. stock indices opened higher on Tuesday, buoyed by
a wave of strong corporate earnings reports. Brazilian
investors often look to markets in the United States, the
world’s largest economy, to gauge international sentiment and

But the Bovespa index’s gains would likely not be enough to
break the Bovespa out of its recent doldrums, said Andre Hanna
Farath, an analyst at brokerage Interfloat.

Though the index has recently tested record highs, the
Bovespa has retreated each time it has neared that barrier.

“The Bovespa has reached a level that it has had a hard
time breaking free of,” he said. Prices in Brazil, he added,
are largely balanced.

Brazil’s currency, the real (BRBY: ), strengthened 0.17
percent to 1.752 per dollar as the greenback dipped against a
basket of major currencies (.DXY: ).

Commodities gained on the weaker dollar, with the
Reuters-Jefferies index (.CRB: ) rising 0.74 percent. The Bovespa
index includes a number of companies tied to the trade in raw
materials, including heavyweight Petrobras (PETR4.SA: ).

Those shares, the most heavily-weighted in the index, led
gains, rising 1.16 percent to 33.94 reais as crude oil (CLc1: )
jumped 1.58 percent.

Mining company Vale (VALE5.SA: ), the second most
heavily-weighted stock in the index, added 0.14 percent to
50.30 reais. Iron miner MMX (MMXM3.SA: ) put on 0.6 percent to
13.46 reais.

Steelmakers advanced, as well. Usiminas (USIM5.SA: ) climbed
0.36 percent to 58.78 reais and CSN (CSNA3.SA: ) moved up 0.48
percent to 33.72 reais.

Changes in yields on Brazilian interest rate futures
contracts (0#DIJ:: ) were mixed ahead of a key decision on
borrowing costs from the central bank next week.

The yield on the contract due June 2010 (DIJM0: ) ticked to
9.145 percent from 9.14 percent. The yield on the contract due
July 2010 (DIJN0: ) edged to 9.43 percent from 9.424 percent.

Both were among the most highly-traded contracts of the

Central bank policymakers meet on April 27 and 28 to
consider changes to the country’s benchmark interest rate, the
Selic, currently at 8.75 percent.

While analysts expect a rate hike, they are divided over
whether the Selic will rise by 50 basis points or 75 basis

Inflation data released on Tuesday underscored the
difficulty in pinpointing the size of a rate hike, which would
be the first in Brazil in nearly two years. [ID:nN20254200]

Inflation to mid-April slowed, leading analysts to see the
data bolstering the case for a smaller hike.

“We judge that the benign inflation numbers released this
morning suggest that the monetary policy committee will likely
not diverge from the exit strategy laid out at the end of last
year,” wrote Luciano Rostagno, chief strategist of CM Capital
Markets, in a note reinforcing his call for an increase of 50
basis points.

But because prices for products linked to domestic demand
went up, some saw the data pointing to a bigger hike.

“This confirms our view that the BCB will have fewer
degrees of freedom to start the hiking cycle with an increase
of 50bps,” wrote Benito Berber of RBS Securities in a note to

Stock Market Advice

(Reporting by Luciana Lopez; Editing by Kenneth Barry)

Brazil stocks rise after 3-session dip; real firms