Latest Fed plan buoys Brazil stocks, currency
SAO PAULO, Nov 25 (Reuters) - Brazilian stocks rallied for a second straight session on Tuesday after the U.S. Federal Reserve announced plans to bolster consumer spending, increasing risk appetite and lifting the national currency.
The Sao Paulo Stock Exchange's benchmark Bovespa index .BVSP rose 1.83 percent to 34,812.86, having rallied more than 9 percent in the previous session.
The index rose as much as 3 percent earlier, buoyed by heavyweight commodity stocks such as Vale and banking shares, but downbeat U.S. data inspired investors to take some profit.
"It's already a good sign that markets are staying at these (levels)," said Eduardo Cotrim, Treasury desk director at Banco Modal.
News that the Fed had thrown a massive life-line to consumers also helped Brazil's currency, the real (BRBY), up 0.26 percent to 2.326 per dollar.
The new Fed plan, which aims to resurrect the collapsed U.S. housing market, includes a $600 billion program to buy mortgage-related debt and securities and a $200 billion facility to support consumer debt securities.
The Fed plan was announced on the same day that official data showed that bank lending in Brazil contracted just 3 percent in October, at the height of the financial crisis.
"The numbers came a little above our expectations. We still have some doubt in relation to new loans. We think we will still see a significant contraction in the next data released," Cotrim added.
Brazil's central bank has taken a range of measures in the past two months to shore up lending, helping to ease the scope of the credit crunch. It unveiled on Tuesday new measures easing reserve requirements in a bid to funnel cash to the country's national development bank.
On the stock market, banking shares like Itau (ITAU4.SA) and Bradesco (BBDC4.SA) rose sharply for the second day in a row, still buoyed by the U.S. government's rescue plan for Citigroup (C.N) and the Fed's latest attempt to shore up the financial system.
Itau shares rose 4.6 percent to 24.69 reais and Bradesco climbed 2.2 percent to 22.33 reais.
Mining giant Vale (VALE5.SA) also rose 1.96 percent to 23.90 reais, even as the price of copper and other industrial metals eased on the grim outlook for the global economy.
Data showed the U.S. economy contracted at its fastest pace in seven years in the third quarter as consumer spending plunged to a 28-year low.
State-run energy company Petrobras (PETR4.SA), the heaviest weighted stock in the index, firmed 0.68 percent to 19.36 reais even as oil prices CLc1 fell 6.5 percent to around $51 a barrel.
Interest-rate futures <0#DIJ:> on the BM&F commodities and futures exchange were mixed. (Reporting by Ana Nicolaci da Costa and Todd Benson; Editing by James Dalgleish)
