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LATIN AMERICAN MARKETS: Brazil Up As Energy Prices, GDP Outlook Rise

By Carla Mozee

LOS ANGELES (MarketWatch) -- Equities across Latin America rallied Monday, with a surge in resource-related stocks and an improved outlook for economic growth paving the way for Brazil's benchmark to finish nearly 3% higher.

Mexican, Chilean and Argentine stocks also climbed alongside those on Wall Street, where blue chips rose to their highest levels of 2009, drawing support from industrial and material issues.

"Emerging market assets were back in favour at the start of the week, helped by a combination of firmer stocks, rising commodity prices and a weaker [U.S. dollar]," said currency strategists at RBC Capital Markets in a note to clients Monday.

Brazil's Bovespa climbed 2.7% to 66,214.35 in a broad-based rally that recouped its loss of 0.5% on Friday. In Sao Paulo, shares of oil giant and market heavyweight Petroleo Brasileiro (PBR) rose 2.9% as crude-oil prices rose 2.6% to $79.43 a barrel.

Oil traders watched developments related to tropical storms headed toward the Gulf of Mexico. They also tracked a decline in the greenback after a weekend meeting of the Group of 20, during which policymakers offered no support for the currency. Policymakers also concluded that stimulus measures should remain in place for the time being because worldwide economic recovery is still fragile.

The dollar index (DXY) hit a 15-month low on Monday. Dollar weakness typically lifts prices of dollar-denominated commodities prices.

On Wall Street, Dow Jones Industrial Average (DJI) jumped 204 points to 10,226 at its close.

In Buenos Aires, shares of Petrobras rose 2.6% and shares of Tenaris (TS) rose 5%. The maker of steel tubes used by the oil industry last week posted a more- than-expected fall of 62% in third-quarter net earnings. Argentina's Merval index rose 2.3% on Monday.

Back in Sao Paulo, steel stocks including Gerdau (GGB) rose as metals prices increased and shares of iron ore miner Vale (RIO) gained 3.4%.

Also on Monday, China, an important market for Vale, had its credit rating outlook raised at Moody's Investors Service. The agency said authorities in China "are successfully steering the economy through the turbulence of the global financial crisis," and recession.

Economists covering Brazil are, on average, more optimistic about recovery in Latin America's largest economy. A weekly survey released by the central bank showed economists raised their forecasts for growth in gross domestic product in 2009 and in 2010.

Analysts now expect expansion of 0.2%, compared with last week's reading of 0.18%. The current forecast for 2010 GDP growth is 4.83%, better than the previous estimated rate of 0.8%.

Also gaining in Brazil were shares of airline Gol Linhas Aereas (GOL), up 2.8% after an upgrade by J.P. Morgan to neutral, with the broker saying a price war with its domestic rivals appears to be nearing an end.

Shares of rival TAM (TAM) rose 1.6% despite the broker's downgrade to underweight because it said the airline is less exposed to the improved pricing, and that its stock price has climbed too high.

Mexico's IPC index rose 2.6% to 30,646.24, and Chile's IPSA gained 1.3%.

In Santiago, shares of Banco Santander Chile (SAN) rose 1.2% as investors eyed the upcoming sale of $500 million in three-year overseas bonds by the banking firm.

  (END) Dow Jones Newswires
  11-09-091848ET
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