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Brazil shares inch up, looking beyond US rate fears

SAO PAULO: Brazilian shares inched up 0.8 percent Tuesday, bringing an end to a three-day losing streak as investors bet a likely hike in US interest rates had already been factored in, traders said.

Sao Paulo's benchmark Bovespa stock index closed at 16,522 points after seesawing in nervous trade as the US Federal Reserve meets to look at interest rates. Another hike in rates could stem investments to Brazil.

"The market is just waiting for the outcome of the meeting at this point, but the trend is to assume that a hike has been priced in after recent losses," said Isabel Lemos, a fund manager at Banco Fator.

Brazilian shares were also bolstered by gains on Wall Street where stocks were up 1 percent.

Among big gainers was the heavily-weighted Telesp, which closed up 3.9 percent at 53 reais, tracking gains in its parent company, Spain's Telefonica.

Telefonica recently announced a share swap plan in which Telesp shareholders will receive stock in Telefonica, linking the prices of the two shares.

"Now, when Telefonica soars, Telesp soars," Lemos said.

Electricity distribution company Light also outpaced the index, closing up 2.5 percent at 246.10 reais, following a report in Brazil's leading financial daily that the firm is planning a lucrative financial restructuring.

Trading was a bit light, however, with some investors sitting on the sidelines until a US rates decision is made. Some 740 million reais in shares were traded, compared with average daily volume of 1.05 billion reais in January.

And other shares did not fare as well. Fixed-line phone firm Tele Centro Sul ended off 4.5 percent at 27.70 reais after reporting lackluster earnings.

News that the company submitted a proposal to buy neighbouring phone company Cia Riograndense de Telecomunicacoes (CRT) failed to animate the stock.

The Bovespa has shed 3.4 percent so far this year. -Reutters