Brazil stocks modestly higher on earnings; real up

Thu Aug 13, 2009 11:30am EDT
SAO PAULO, Aug 13 (Reuters) - Brazilian stocks edged higher on Thursday in choppy trade, buoyed by generally upbeat economic news at home and tracking gains in world stocks.
The benchmark Bovespa index .BVSP climbed 0.47 percent to 56,855.06 in morning trading, after dipping in and out of negative territory. It has gained more than 50 percent so far this year on growing evidence that Latin America's largest economy is on the rebound.
The index was underpinned by higher corporate results and better-than-expected retail sales in Brazil and gains in world stocks, as Germany and France surprised investors by reporting a return to economic growth.
But in the United States disappointing retail sales and employment numbers undercut hopes that the world's largest economy is on the road to recovery.
"The data are a little conflicting for Brazil," said Marcelo Portilho, a strategist with CM Capital Markets. Because Brazilian equities often shadow equities abroad, he said, it was important to gauge how external markets absorbed the new numbers, as well.
Brazil's currency, the real BRBY, traded nearly flat against the dollar, strengthening 0.11 to 1.832 per dollar. The real has hovered near its strongest levels since September in recent trading.
Corporate earnings continued strong in Brazil, as petrochemical maker Braskem (BRKM5.SA), Banco do Brasil (BBAS3.SA) and electricity generator Cesp (CESP6.SA) all recently reported increased second-quarter profits.
Retail sales in Brazil beat analyst forecasts in June but May numbers were revised down in figures released by the Brazilian government. [ID:nN13224777]
At the stock market, commodity stocks rose as energy and copper prices rallied.
State-controlled energy giant Petrobras (PETR4.SA) added 1 percent to 32.21 reais in morning trading. Crude CLc1 pared morning gains on worries about the U.S. retail numbers but still advanced 1.05 percent.
Mining company Vale (VALE5.SA), the world's largest iron ore producer, climbed 1.66 percent to 33.16 reais, as copper prices gained more than 3 percent.
Limiting gains were shares of BM&FBovespa (BVMF3.SA), the world's fourth-largest exchange operator by market value, which posted a weaker-than-expected second-quarter profit on Tuesday. Morgan Stanley downgraded its rating on the shares to equal-weight from overweight, and the shares sank 2.52 percent to 12.39 reais.
Itau Unibanco (ITUB4.SA) fell 0.76 percent to 34.08 reais, on track for a third day of losses. The bank, Latin America's previous largest by assets, reported this week that recurring net income plunged in the second quarter.
Yields on Brazilian interest rate futures contracts <0#dij:> continued to slide. The U.S. central bank on Wednesday hinted that monetary tightening there remains far off, lightening pressure for Brazilian policymakers to do the same. Analysts expect the Brazilian benchmark interest rate could remain at its current record-low 8.75 percent through as long as the end of 2010. (Reporting by Luciana Lopez; Editing by Leslie Adler)