EMERGING MARKETS-Brazil stock market gains, led by miner Vale

Thu Jan 16, 2014 9:52am EST

* Vale leads Bovespa higher on world economic outlook
    * Petrobras limits index gains on fuel price outlook
    * Brazil interest rate hike overshadowed by Vale, Petrobras

    RIO DE JANEIRO, Jan 16 (Reuters) - Brazil's benchmark
Bovespa stock index rose on Thursday, led by mining company Vale
SA, on positive economic news from wealthy nations
that raised the outlook for profit at commodities producers.
    The Bovespa index, which tracks the most-traded
stocks on the Sao Paulo stock exchange, rose 0.4 percent in
mid-day trading. Chile's IPSA stock index and Mexico's
IPC index were little changed from Wednesday's close. 
    Bovespa stocks were led higher by mining company Vale SA
. Vale rose along with rival mining companies on
European exchanges on signs that the global economy is
rebounding, boosting the profit outlook for commodities
producers and exporters.
    European car sales in December grew at their fastest
year-on-year rate in four years while Japanese machinery orders
and manufacturing activity in the key U.S. state of New York
rose. Japan, Europe and the United States are important buyers
of Brazilian and other Latin American goods. 
    Positive world economic news overshadowed a half percentage
point increase in benchmark Brazilian interest rates by the
central bank late Wednesday. The larger-than-expected increase,
which took the base Selic rate to 10.5 percent, could slow an
already sluggish economy. 
    "It would be rational to think that the market would fall
with equities becoming less attractive," said Rafael Barros, a
fund manager with Humaitá Investimentos in São Paulo. "But
yesterday's decision shows the government is committed to
fighting inflation. It's an attempt to regain the credibility
lost over the past few months."
    Vale preferred shares, the company's most-traded class of
stock, rose 1.8 percent while the Rio de Janeiro-based company's
common shares rose 2.4 percent. Vale is the world's largest iron
ore producer and a major producer of nickel, copper and
fertilizers.
    Analysts at Citibank in London raised their 12-month sector
outlook for global mining stocks to "bullish" from "neutral" for
the first time in three years saying that company efforts to cut
costs and improve efficiency have created better fundamentals
for the industry and that share prices are at rock bottom.
    Bradespar SA, an industrial holding company
linked to Brazilian bank Banco Bradesco SA, rose 1.7
percent. Bradespar is one of three companies that shares voting
control of Vale.
    Vale's contribution to the Bovespa's gains was undercut by
Petroleo Brasileiro SA, as Petrobras is formally
known. Late on Wednesday, the government said it was not
considering an increase in gasoline and diesel fuel prices in
June, denying a report in the Folha de S. Paulo newspaper.
    Petrobras' refining division has lost more than $12 billion
in two years because of the government's fuel-pricing policy.
This policy keeps domestic prices below world prices, forcing
Petrobras to sell rising fuel imports at a loss. 
    
    Latin American key stock indexes:
    
     Stock indexes                  daily %  YTD %
                       Latest       change   change
 MSCI LatAm           3,106.51      -0.18    -2.77
                                             
 Brazil Bovespa       50,327.69     0.44     -2.29
                                             
 Mexico IPC           42,587.79     0.18     -0.33
                                             
 Chile IPSA           3,648.36      -0.05    -1.37
                                             
 Chile IGPA           18,032.85     -0.05    -1.07
                                             
 Argentina MerVal     5,726.32      0.68     6.22
                                             
 Colombia IGBC        12,594.53     -0.05    -3.65
                                             
 Peru IGRA            16,186.18     0.04     2.75
                                             
 Venezuela IBC        2,762.96      0        0.96
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