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Brazil shares slip under Wall Street pressure

SAO PAULO: Brazilian stocks erased earlier gains to close 0.4 percent lower Monday, slipping into negative territory after a Wall Street fall spoiled a modest upward trend in thin pre-holiday trade, operators said.

Shares in Globocabo, a cable television firm with big Internet ambitions again shone, rising 2.3 percent to 3.6 reais, despite ING Barings' downgrade of the stock to hold from strong buy on concerns about the firm's valuation.

"When you buy Globocabo it's not because of its value, the company itself is hardly worth more than 2 reais. You pay for its Internet prospects you are investing in Brazil's first Internet venture," said Marcelo Borges, director at Tudor Asset Management.

Globocabo's stock price has doubled in just over a month.

The Sao Paulo Stock Exchange's leading share index Bovespa ended down at 16,971 points, or 0.7 percent off since end-December. Trading volume was low at 452 million reais, compared to last month's daily average of over 900 million.

The Bovespa, which accounts for 90 percent of all stock business in Brazil, will be closed Tuesday as Sao Paulo celebrates the anniversary of its foundation.

Even though Monday's drop was the fifth consecutive fall on the Bovespa, traders said the market was generally optimistic on the good prospects for Brazil's economic growth this year.

"There was some profit-taking last week. Today we had heavy Dow pressure. But it doesn't happen every day. Shares should start rising soon," said one trader.

Dealers said a planned merger between the Bovespa and Rio de Janeiro's BVRJ stock bourse was another positive consolidating factor for the market.

The Dow Jones industrial average fell more than 2 percent in the late trade as interest rate fears began to eclipse strong corporate earnings news.

Shares in oil giant Petrobras only slipped some 0.7 percent to 413 reais Monday despite last week's oil spill near the beaches of Rio de Janeiro, the city's worst ecological disaster in 25 years.

Traders said they had to see what legal action would be taken against Petrobras before selling or buying the stock.

Traders said the receipts, which lost 1.7 percent to close at 236 reais, were likely to gradually lose their liquidity.

Telefonica recently announced plans to buy out four Latin American units, including the two in Brazil. The move spurred a rally that culminated last Monday, and the market has been on the down slope since.

Telesp edged up 0.35 percent to 51.88 reais in thin business and Tele Sudeste slumped 3.5 percent to 16.6 reais in further profit-taking.-Reuters