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Brazil stocks close at new high amid telecoms binge

SAO PAULO: Stock investors bought heavily in Brazil's burgeoning telecommunications sector on Tuesday and lifted the main share index to a new record high for the second consecutive day, traders said.

Bullish trading in New York and uplifting local news like positive GDP growth in 1999 and signs of lower inflation fed the buying, which has gathered steam since the US Federal Reserve raised rates by 0.25 percent last week.

The Sao Paulo Stock Exchange's Bovespa Index closed 3.1 percent higher at 18,685, pulverizing Monday's record of 18,125.

Volume was a hefty 1.3 billion reais ($740 million) up from 912 million reais ($518 million) on Monday.

"It could be that there is a lot of foreign investment coming in, but we'll have to wait to be sure," said Julio Ziegelmann, fund manager at BankBoston.

Ziegelmann said the main factor behind the new investment push is a respite in rate worries in the US

But news Tuesday that Brazil's gross domestic product grew 0.8 percent in 1999 and an impressive 3.1 percent in the fourth quarter over the same year-earlier helped reinforce an already rosy domestic outlook.

The first inflation reading of the February IGP-M inflation index, showing a low rise of 0.2 percent also had a positive influence on trading, traders said.

The Bovespa is now up 4 percent in two days, 14 percent so far in February and 9 percent since Jan. 1.

The fast-growing telecommunications sector continued to corner most of the buoyant market's attention.

Tele Centro Sul, the fixed-line operator part-owned by Telecom Italia, continued to be a favourite as speculation spurred that the Italians will announce a stock buyout like Telefonica did for its Brazil units.

Tele Centro Sul added a 5.6 percent rise to its 5.6 percent gain on Monday to close Tuesday at 30.89 reais.

Telemar, the domestic owned fixed-line operator, gained 5.8 percent to 51.80 reais as reports swirled about a foreign partners looking to buy into the company.

Benchmark Telebras receipts took 25 percent of the volume and advanced 3.8 percent to 275.50 reais.

The non-telecom star of trading was Minas Gerais electric utility Cemig, which was the second most traded stock with 11 percent of volume.

Cemig, recently depressed by Minas' government attempt to oust minority shareholders, rebounded 5.2 percent to 32.70 reais. Newspapers in Minas said the minority shareholders, which include US-based AES Corp and Southern Co, are ready to throw in the towel and leave Cemig.-Reuters