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Brazilian stocks dragged down by Dow at close

SAO PAULO: Brazilian stocks' independence from Wall Street this week came to a sudden end on Friday as local share prices dropped sharply at the close while losses piled up in the U.S., traders said.

The Sao Paulo Stock Exchange's Bovespa's Index closed 2.8 percent lower at 18,083, coming off a low of 18,023 and holding on to the coveted 18,000-mark.

The Bovespa had traded for most of the day around Thursday's closing level, even with declines on Wall Street, but then succumbed after selling pressure intensified there.

Around closing, the Dow Jones industrial average was down more than 2 percent at three-month lows as shares of Microsoft fell sharply.

"Our decline was all in function of what was happening outside Brazil," said Carlos Hokama, a fund manager at Credibanco. "But we were also with an accumulated rise of 14 percent and we needed a reason to take profits."

The Bovespa is still up 10.3 percent so far in February and is showing a gain of 5.8 percent since Jan. 1.

Mining giant Cia Vale do Rio Doce was hard hit by the selling, sliding 7.5 percent to 47.05 reais, while oil titan Petrobras retreated 5.5 percent to 416 reais.

Telecom shares had a more benign day after heavy buying earlier in the week in this sector took the Bovespa to a new record high.

Telesp, the Sao Paulo operator run by Telefonica, showed its maverick tendencies by gaining 1.1 percent to 63.20 reais.

But benchmark Telebras receipts dropped back with the broad market 2.9 percent to 265.01 reais.

The electricity transmission companies climbed on expectations that they will be using their infrastructure for data transmission, thereby capitalising on the technology stock fever sweeping the world, traders said.

Cia de Transmissao Paulista jumped 17.6 percent to 11.29 reais.

Minas Gerais utility Cemig saw its first loss in seven days, dropping back 3.7 percent to 32.73. The stock has gained steadily since Minas Gerais state signed a debt negotiation deal with the federal government last week, dispelling fears of a new default by the state.

Trading volume was slightly lower than Thursday at 956 million reais ($543 million).-Reuters