Thursday, May 18, 4:45 PM EDT (Thomson Financial): Latin American
stocks retreated, extending recent losses, on continued worries about
rising U.S. inflation and interest rates. Argentine shares were further
pressured by disappointing local economic data.
Brazil's Bovespa Index dropped 483.53 points, or 1.26%. Mexico's
benchmark Bolsa Index fell 44.84 points, or 0.22%, while Argentina's Merval
Index lost 29.78 points, or 1.77%.
Brazilian stocks sank, extending yesterday's sell-off on continued
concerns about U.S. inflation and interest rates following yesterday's data
showing a bigger-than-expected rise in U.S. consumer prices in April.
Investors fear that recent signs of inflationary pressure will lead the
U.S. Federal Reserve to continue its tightening cycle longer than expected,
potentially diverting investment flows away from emerging markets like
Brazil.
Closer to home, the Fipe research foundation reported that consumer
prices in Sao Paulo city gained 0.08% in the four weeks ended May 15. That
was the same increase seen in the four weeks ended May 7.
On the corporate front, CVRD said it reached an agreement on 2006 iron
ore price contracts with South Korean steel maker Posco. Posco agreed to a
19% hike in iron ore fines and a 3.0% decline in iron ore pellet prices.
That followed similar agreements with other steelmakers in recent days.
Elsewhere, Mexican shares dipped, as investors continued to fret over
the U.S. inflation and interest-rate outlooks. Helping to limit losses,
however, a Mexican retailers association, Antad, said sales at its member
establishments surged 19.2% in April. Same-store sales rose 9.1% from April
2005.
In other news, engineering and construction firm Empresas ICA won a US
$105 million contract to upgrade and maintain a highway between Queretaro
and Irapuato in central Mexico, the Communications and Transport Ministry
said.
Argentine issues dropped amid lackluster local economic data. The
national statistics agency (INDEC) said its index of economic activity for
March inched up 0.1% from February and rose 7.7% from March 2005. The
year-over-year result was well below economists' forecasts of 8.6%.
Meanwhile, INDEC confirmed that Argentina's first-quarter unemployment
rate was 11.4%, up sharply from 10.1% in the fourth quarter.
-- Paul.Davee@thomson.com; Thomson Financial Corporate Services
This is Thomson Financial Corporate Services Latin American Commentary.
The information herein is believed to be true and accurate, we take no
responsibility for inaccurate information and reserve the right to update
our reports. If you have any questions please e-mail James Sang at
james.sang@tfn.com or call 646.822.6233. For more information about Thomson
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SOURCE Thomson Financial Corporate Group
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