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Brazil stocks rise on Dow, telecom sector shines

SAO PAULO: Brazilian shares overcame early losses and rose about 1 percent on Wednesday after the Dow 30 rallied, but the rise was hampered by a decline in the US technology-heavy Nasdaq index, traders said.

Telecom stocks were among the day's biggest gainers with Telemig Celular Part rising 15.4 percent to 7.5 reais. Traders attributed the rise in telecommunications firms to a price correction after days of falls.

Sao Paulo's benchmark Bovespa index ended up 0.93 percent at 17,381 points in moderate turnover of 726 million reais as Dow Jones Industrial Average sprang up over 3 percent and Nasdaq was in the same numbers in the negative territory.

"What we see now is a battle between a new economy and an old economy," said Andre Caminada, a senior equities trader with Lloyds Bank, referring to a difference between the Dow and Nasdaq indices and its impact on the Brazilian market.

Added another trader: "It proves that in the end we are not all that much technology-oriented." Many traders have been saying recently Nasdaq was becoming a new guiding star for the Brazilian market.

Apart from some rising telecom firms, which traders said had been undervalued recently, they singled out CVRD mining giant, which posted healthy gains for the same reasons. CVRD rose 3.64 percent to 44.2 reais.

"CVRD is still down 8 percent on the month mainly due to a stronger real currency, which affects this big exporter. CVRD became too undervalued and this new rise is natural," said Caminada.

Marcelo Porto of Concordia brokerage singled out one of market's favourites, Globocabo Internet and cable television firm, which fell 0.9 percent in a rising market.

"Globocabo's fall is interesting, as it is not due to a lack of market confidence, but due to technical reasons," he said, explaining that some operators were selling Globocabo now in order to buy them later to use in the company's debentures for shares swap scheme.

Common shares of Telesp Celular Part gained a tiny 0.1 percent to 28.3 reais after a stellar 30 percent jump on Tuesday following a share-buying offer by Portugal Telecom, but its preferred stock, which is not part of the PT scheme, rose 3.3 percent to 34.5 reais.

The Bovespa is down 1.6 percent so far this month, but is still up 1.7 percent since the start of the year.

Brazil's securities and exchange commission said on Wednesday Brazilian bourses saw a net foreign capital outflow of $191.25 million in February compared with an inflow of $50 million in January as US rates hikes scared off many investors. -Reuters