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Brazil shares end flat amid key economic decisions

RIO DE JANEIRO: Brazilian shares inched up 0.1 percent Thursday as the market shrugged off key decisions to raise the minimum wage and to maintain instead of lower a benchmark interest rate, traders said.

"Investors took the decisions well since they were expected," a trader at Credibanco in Sao Paulo said. "People also recognise that things could be worse."

Sao Paulo's benchmark Bovespa stock index closed at 18,331 points, ending little changed for the second day in a row after a huge 4.7 percent surge on Tuesday.

Some investors had expected stocks to decline after the Central Bank decided Wednesday night to hold its key Selic reference rate steady at 19 percent, keeping companies' borrowing costs high. But most economists had predicted the Central Bank would do just that.

"But the decision was already factored into the stock market," another trader said.

Markets had also been nervously awaiting a decision by the government to raise the minimum wage as high as $100. Officials said Thursday, however, that the new minimum salary would be 151 reais, or about $88.

"The market recognises that this is a victory for the government and its fiscal drive," the trader at Credibanco said. Economists had worried that a higher minimum wage would put pressure on inflation and raise government pension costs.

Blue chip stocks traded mixed, seesawing around their Wednesday closing price.

Telebras receipts, which account for up to 40 percent of trading, closed down 0.2 percent at 275 reais while the state-owned power giant Eletrobras ended up 0.9 percent at 34.80 reais.

Brazil's top brewer Brahma led gainers on Thursday, ending up 2.8 percent at 1,285 reais after a senior member of the country's antitrust watchdog said he saw no obstacles for Brahma's proposed mega-merger with Antarctica.

Regional electricity utility Cemig closed down 2.5 percent at 30.24 reais, however, when a court upheld a decision stripping minority shareholders of veto rights. The companies, including U.S.-based Southern Energy Co. and AES Corp., are attributed with turning Cemig into a profitable firm.

Trading was stronger on Thursday than in recent sessions at 860 million reais ($500 million), but still fell short of average daily volume of about $1 billion in the first two months of the year.

The Bovespa is up 3.8 percent so far this month and has jumped 7.2 percent so far this year.-Reuters