By Guillermo Parra-Bernal and Priscila Jordão
SAO PAULO, Oct 3 Brazilian stocks seesawed on
Thursday as a decline in banking shares and concern over
negotiations to reopen the U.S. government offset early gains in
commodities and steel shares.
The benchmark Bovespa stock index reversed early
gains and was trading 0.5 percent down at 52,851.19. Shares of
Grupo Oi SA plunged, reversing all of their
gains in the prior session when it announced a merger with
Portugal Telecom SGPS SA.
The MSCI Latin American stock index moved in
tandem with U.S. markets and fell 0.5 percent to 3,353.33.
Mexico's Bolsa index shed 0.2 percent, while Chile's
benchmark IPSA index rose 0.3 percent.
Indications that efforts to end the stalemate in Washington
are failing could hamper Brazilian equities. Often, sentiment in
Brazil - the most liquid stock market among emerging markets -
suffers when a flow of negative news weighs down equity markets
in the United States, Europe and Asia.
"So far the government shutdown in the U.S. had been a
non-event in this market, but a prolonged shutdown could weigh
down sentiment," Rafael Dornaus, an equity trader with Espírito
Santo Investment Bank, said. "People don't want to be caught
either long or short in such an uncertain environment."
Preferred shares of Oi tumbled 8.1 percent, an
indication that investors are skeptical the combined company
which was formed by Oi and Portugal Telecom will deliver more
than $2.5 billion in cost savings, analysts said.
Market participants largely ignored a decision by Moody's
Investors Service to lower the outlook on Brazil's credit
rating, citing low growth and rising debt. According to Luis
Gustavo Pereira, an equity strategy with São Paulo-based Futura
Commodities Corretores de Mercadorias Ltda, the decision was
"In our understanding, the decision was largely expected by
market participants, thus its direct impact on the allocation of
assets will probably be low," Credit Suisse Securities
economists led by Nilson Teixeira wrote in a client note.
Still, Petróleo Brasileiro SA, Brazil's
state-controlled oil company known as Petrobras, fell 0.9
percent. Banco do Brasil SA fell 1 percent, while
education company Anhanguera Educacional SA dropped
1.5 percent - declines that traders said were triggered by
Limiting declines, Vale's preferred shares, the most widely
traded stock in the Bovespa, rose as much as 1 percent to as
high as 32.10 reais - the highest level since Sept. 27.
Management at the Rio de Janeiro-based company will propose that
the board of directors approve a $2.25 billion dividend to
Steelmakers rose after the Foreign Trade Chamber, a trade
and industry ministry body, imposed a series of anti-dumping
penalties on imports of plates from South Africa, China, South
Korea and Ukraine. Preferred shares of Usinas Siderúrgicas de
Minas Gerais SA, a flat steel producer known as
Usiminas, gained 1.6 percent to 11.31 reais.
In addition, Morgan Stanley & Co analysts led by Carlos de
Alba raised the recommendation on shares of Gerdau SA,
the largest steelmaker in the Americas, to "overweight" from
neutral, citing the impact of a weaker Brazilian currency on
revenues and the company's exposure to an economic recovery in
the United States.
Latin America's key stock indexes at 1435 GMT:
Stock indexes daily % YTD %
Latest change change
MSCI LatAm 3,361.09 -0.22 -11.3
Brazil Bovespa 52,983.52 -0.22 -13.07
Mexico IPC 41,211.92 -0.21 -5.71
Chile IPSA 3,831.78 0.26 -10.92
Chile IGPA 18,844.96 0.18 -10.56
Argentina MerVal 4,877.18 0.15 70.87
Colombia IGBC 14,088.50 -0.02 -4.26
Peru IGRA 15,793.76 -0.14 -23.44
Venezuela IBC 1,785,064.8 0 278.64