20000322

Brazil shares end flat in thin trade on US rates

RIO DE JANEIRO: Brazilian shares ended flat in very light trade on Monday as investors awaited the outcome of two meetings this week that will determine whether US and local interest rates are on the rise, traders said.

Brazil's benchmark Bovespa stock index inched up 0.1 percent to 17,526 points, also influenced by the lackluster performance of US stocks. Some 533 million reais in shares traded hands, just half average daily volume over the last couple of months.

The US Federal Reserve is expected to decide to hike short-term US rates on Tuesday, and Brazil's monetary policy committee (Copom) is due to announce the results of its monthly rates meeting the next day.

"Due to these two factors, the market is in waiting mode," said Carlos Hokama, a fund manager at Credibano in Sao Paulo.

"The week is starting out slow and I don't expect it to get better until after these decisions," Hokama said.

Key blue chips like state-owned oil giant Petrobras and TV and Internet operator Globocabo took hits amid speculation of another rates hike in the United States. Investors could opt for high-yielding US Treasuries over risky Brazilian stocks if US rates climb.

Petrobras ended off 3 percent at 455 reais and Globocabo closed down 4.5 percent at 3.43 reais.

Telephone companies surged, however, following a British newspaper report that Spanish operator Telefonica and British Telecom are in merger talks. Two firms controlled by Telefonica led the rise in the Brazilian phone sector.

Telesp closed up 3.6 percent at 55.40 reais and Tele Sudeste Celular surged 7.8 percent to end at 18.79 reais.

"Other phone companies followed suit, also fuelled by speculation that foreign owners will continue to buy outstanding shares," another stock trader said.

Embratel long-distance carrier which is controlled by MCI WorldCom closed up 5.8 percent at 46.01 reais and Telebras receipts -- a basket of shares grouping a dozen phone companies -- ended up 2.1 percent at 259.90 reais.

The Bovespa is down 0.1 percent so far this month, but it is still up 2.7 percent so far this year. -Reuters