Tuesday, June 20, 2006, 4:45 PM EST (Thomson Financial): Latin American
shares were mixed on the day amid uncertainty over domestic and overseas
monetary policy. Brazilian and Argentine shares moved lower, while Mexico
bounced back from sharp declines yesterday. Brazil's Bovespa Index receded
265.21 points, or 0.78%. Mexico's benchmark Bolsa jumped 199.40 points, or
1.13%, and Argentina's Merval Index tumbled 28.25 points, or 1.79%.
Brazilian investors are increasingly wary about monetary policy, with
some saying the Brazilian Central Bank may call a halt to its recent
monetary loosening policy. A pause in rate cuts could come as a response to
recent emerging-market volatility, they said. Brazil's Selic base interest
rate is currently 15.25%, despite eight consecutive rate cuts.
In economic news, the Fipe research foundation said that the consumer
price index for Sao Paulo fell 0.50% in the four weeks ended June 15,
compared with a 0.38% decline in the four weeks ended June 7. The most
recent fall was sharper than expected by analysts.
In corporate reports, CVRD rose, after Chinese steelmakers agreed to a
19% iron-ore price increase with BHP. A similar deal is expected to be
announced by CVRD later this week.
Elsewhere, Mexican stocks recovered today, rising sharply in midday
trading, after starting the week under heavy selling pressure. Mexican
stocks had been under pressure, along with other emerging-market assets,
amid fears of rising global interest rates. Meanwhile, investors are also
looking forward to the Bank of Mexico's monthly policy meeting this Friday,
in which the overnight lending rate is expected to remain unchanged.
On the corporate front, Cemex climbed, after a major investment bank
initiated coverage of the cement giant at "overweight," saying the
company's long-term growth potential isn't reflected in the price and that
the recent selloff presents a good buying opportunity.
Argentine shares slid as the local market played catch-up after being
closed for a national holiday Monday. There were few financial news items
available to steer trading today. Trading volume remained low.
-- Michael.O'Brien@contractor.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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