20000401Brazil stocks fall below support level on Nasdaq woes

SAO PAULO: Brazil's stocks fell 2.3 percent on Thursday, crashing through the key 18,000-point support level, amid blood-letting in the U.S. technology stocks sector, traders said.

They noted only one stock -- merged firm AmBev -- staged a rally after the country's anti-trust agency Cade approved the merger between top brewers Brahma and Antarctica to form the world's third largest brewer.

AmBev shot up 14.3 percent on Thursday to 1,200 reais. Brahma, however, edged down by 0.1 percent, after erasing morning gains. It had resisted overall market losses so far this week on expectations of the Cade approval.

The Sao Paulo Stock Exchange's Bovespa index lost 2.3 percent to close at 17,622 points, recouping slightly from bigger losses of over 3 percent in the last half-hour of trading. Turnover was light at 650 million reais, which compares to last month's daily average of 1.2 billion reais.

"The market is simply reacting to Nasdaq losses," said Roberto Dotta Filho, head of equities and analysis at Tudor Asset Management. "The demise of Tiger Management earlier in the day also helped to trigger the fall."

Traders said the veteran hedge fund, which said on Thursday it would shut down its six funds and liquidate most of its $6 billion in investments, had a significant portfolio of emerging economies like Brazil. They expected selling from this portfolio in the short run.

Nasdaq composite index tumbled 186 points on Thursday, in its fifth-largest point decline in history.

Renato Vercesi of BBA/Icatu brokerage said the market was also disillusioned after it did not see big oil price cuts following world crude exporters' agreement to boost supply.

"Also, there is foreign money missing in our market," he said. "Most of the turnover is from local treasuries."

Some telephony shares, among them benchmark Telebras receipts which fell 3.16 percent to 256.5 reais, posted bigger losses than others, traders said.

"Most cellular phone firms which had risen lately, now fell on profit-taking. Basically, all those who had some fat to burn are burning the fat now," Vercesi said.

Traders were generally calm about the market's breaking through the support level, expecting it to recover at some stage soon on Brazil's positive economic and investment prospects.

Globocabo cable TV and Internet operator weathered the market's fall on Thursday, staying at 3 reais in what traders said was a sign of an accomplished price correction following a period of losses on profit-taking.

Mining giant CVRD edged up 1 percent as rumours of ownership changes in the company returned to the market.

Despite the fall, its third decline in a row, the Bovespa is still a tad above the levels of the start of the month and is 3.2 percent higher than at the beginning of the year.-Reuters