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Brazilian stocks fall again on profit-taking

SAO PAULOP: Brazilian stocks fell 1.5 percent on Monday, crashing through the coveted 18,000-point mark on the leading Bovespa index, as a nervous market skimmed more profits off the recent heady gains.

Electric utilities led the market down and even most telecommunications firms, which had been expected to hold steady or rise in the short term, fell victim to selling.

"Local demand has fallen sharply and external demand has been low for a while," said Tomas Taterka, equities director at Banco Cidade. "However, selling volume is fairly low and we cannot speak of a serious market downturn."

Sao Paulo's benchmark Bovespa index retreated 1.5 percent to close at 17,819 points after Friday's 2.8 percent loss. Trading volume was a tiny 650 million reais ($367 million), compared to last week's daily volumes of over 900 million ($500 million).

The Bovespa is still up 8.7 percent so far in February and is showing a gain of 4.2 percent since the start of the year.

Marcelo Porto of Concordia brokerage said the high price of oil was also depressing the market because of its inflationary effect. That could give the Central Bank another reason to hold interest rates at a policy-making meeting Tuesday and Wednesday.

"The market still expects a small cut, which would be a good boost for stocks, but if it doesn't happen it won't make things much worse," he said.

While the stock market sees a possibility of lower rates, a Reuters poll of 20 economists showed 15 believe the Central Bank will keep its key Selic rate at 19 percent.

Oil giant Petrobras, which rose 1.2 percent after the company revealed a rise of nearly 30 percent in its 1999 net profit, erased its gains in the last minutes of trading, slipping 0.2 percent to 414.9 reais.

"It went up so well after trading in the stock resumed because the results are really positive, and then someone sold and buried the trend," said one trader.

Electric utilities suffered some of the day's biggest corrections.

Sao Paulo's Eletropaulo power company slumped 10.9 percent to 115.9 reais, while the same state's Tiete utility fell 6 percent to 12 reais and Minas Gerais state's Cemig dropped by 4.7 percent to 31.2 reais.

In telecoms, Telemar, or Tele Norte Leste Participacoes represented the biggest fall, sliding 6.4 percent to 45.9 reais.

But Telesp, the Sao Paulo operator run by Spain's Telefonica, again showed resistance to the broad market's fall by gaining 1.3 percent to 64 reais.-Reuters