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Brazil stocks end with gain fueled by Petrobras

SAO PAULO: Brazilian stock prices recovered from a brief post-Carnival slump and powered ahead on Thursday, fuelled by Petrobras and Eletrobras shares, traders said.

After retreating on Wednesday, the first day of post- Carnival trading, the Sao Paulo Stock Exchange gained 2.0 percent to 18,650, just a below the record high close of 18,686 set on Feb. 8.

An advancing Wall Street gave support to the local market, but good news in the region mattered more.

"I think the news of Mexico's upgrade to investment grade also is helping Brazil," said Carlos Augusto Levorin, a partner at Oryx Asset Management. "People are thinking Brazil could also have some sort of upgrade."

Moody's Investors Service gave Mexico the coveted investment grade rating on its debt on Tuesday, when Brazil's markets was closed for the four-day Carnival weekend.

On Thursday, a senior official at Moody's shot down market speculation about an imminent ratings upgrade for Brazil and Argentina, saying the high debt-to-export ratios of both countries constrained their credit worthiness.

Still, market players brushed aside the official line.

"If you make things easier for Mexico, you end up making them easier for Brazil," said Levorin.

Brazil and Mexico are Latin America's two largest economies.

Petrobras gained 3.5 percent to 511.90 reais as the state-run oil conglomerate continued to benefit from the sharp rise in world oil prices.

Petrobras stock has also risen on expectations of greater liquidity as the government prepares to sell 32 percent of voting stock to investors on the domestic market.

The federal government's electricity holding Eletrobras also stood out Thursday, with a huge gain of 20 percent to 38.95 reais in the last five minutes of trading.

Traders noted Eletrobras' share price has lost out on much of the market's upward momentum in recent months, but it is also a very volatile stock.

Earlier in the day, Donaldson Lufkin & Jenrette raised its research rating for Eletrobras to "buy" from "market performance."

Total volume on the Bovespa was light, but normal for Carnival week at 530 million reais ($300 million).

The Bovespa is up 5 percent so far in March and 8.5 since Jan. 1. -Reuters