Brazil stocks, real rise as U.S. data improves
By Luciana Lopez
SAO PAULO, June 16 (Reuters) - Brazilian stocks edged up on Tuesday, reversing course from Monday's steep drop, as better-than-expected May housing starts in the United States sparked more optimism in a possible global economic recovery.
U.S. housing starts were up 17 percent last month, government data showed on Tuesday. The Bovespa index .BVSP of the Sao Paulo stock exchange rose 0.7 percent to 52,418.99 points.
In contrast, the index sank 2.85 percent on Monday, dragged down by falling commodities.
Despite the optimism, Marcelo Lima, an analyst at Spinelli Corretora in Sao Paulo, said he expected volatility and a downtrend in stocks this week as investors wait for news from the Obama administration on reform of financial regulations.
"Investors should think about the real condition of the (Brazilian) economy," Lima added. "There are no fundamentals in the real economy" to support strong stock gains.
Early movers leading the Bovespa up included shares of BM&F Bovespa (BVMF3.SA), the holding company that operates the world's fourth-largest exchange operator by market share, up 4 percent to 11.53 reais. Itau Securities analysts boosted their year-end fair value price for the stock to 14 reais from 11.7 reais on expectations of a rise in equity trading volumes and progress by management in implementing a more efficient platform for derivatives trading.
A 2 percent surge in crude oil prices drove up shares of state-controlled energy company Petrobras (PETR4.SA), up 0.3 percent to 33.4 reais. Petrobras shares had fallen 1.91 percent on Monday as oil CLc1 sank in New York.
Mining company Vale (VALE5.SA) traded essentially flat. Steelmaker Gerdau (GGBR4.SA) gained 0.8 percent to 20.45 reais and CSN (CSNA3.SA) rose 0.7 percent to 46.47 reais.
Clothing retailer Lojas Renner (LREN3.SA) advanced 1.3 percent to 22.28 reais, after a loss of 3.3 percent over the previous two sessions.
Retail data on Tuesday showed April sales dropped 0.2 percent, in line with expectations, and March figures were revised from a 0.3 percent gain to a 0.5 percent loss. For details please see [ID:nN1626570].
The real (BRBY) gained 0.7 percent to 1.94 per dollar as investors shunned the dollar globally .DXY on renewed chatter about the use of the U.S. currency in international reserves.
"The existing set of reserve currencies, including the U.S. dollar, have failed to perform their functions," Russian President Dmitry Medvedev told a news conference on Tuesday. For details please see [ID:nN16351801].
The dollar had strengthened on Monday on comments from Russian Finance Minister Alexei Kudrin, who said the dollar's role as the world's main currency reserve was unlikely to change in the future.
Yields on Brazilian interest rate futures contracts <0#DIJ:> also slid. Yields on the contract due January 2011 DIJF1, the second most widely traded, fell to 9.98 percent from 10.09 percent on Monday. The most widely traded contract, which is due January 2010, was unchanged at 8.96 percent. (Editing by Leslie Adler)
