20000220Brazil real closes 0.3 pct weaker at 1.779/dlr

SAO PAULO: Brazil's real currency BRBY weakened 0.3 percent to close at 1.779 to the dollar on Friday, driven down by Wall Street-traded stocks and fresh talk of a rise in US interest rates, traders said.

"After lunch the market was following the fall in US shares," said a trader with a foreign bank in Sao Paulo.

The Dow Jones Industrial Index was nearly 2.5 percent lower when the Brazilian forex market closed. Brazilian stocks on the Sao Paulo Stock Exchange were down almost 2 percent.

The real shed 0.6 percent of its value this week.

However, traders said the currency could recover slightly next week on expectations of capital inflows after a big privatisation deal this week.

A group led by Spain's Iberdrola agreed to pay $1 billion for control of Brazilian utility Celpe on Thursday. It was not immediately clear how much money could be brought in or when.

International markets have been dogged by Thursday's comments by US Federal Reserve Chairman Alan Greenspan, who said higher interest rates may be needed to keep the world's biggest economy from overheating.

Higher US interest rates normally depress emerging economies like Brazil's as they lure investors' cash from their markets into safer US investments.-Reuters