Brazil stocks fall on Petrobras, steelmakers
Brazil's stock market fell on Thursday, led lower by steel issues and after state-owned oil firm Petrobras raised fuel prices much less than expected.
The Sao Paulo Stock Exchange's broad Bovespa index fell 1.32 percent to 22,980.7 after tumbling 2.8 percent in the previous session. Meanwhile, Brazil's real currency dipped 1.13 percent to 2.872 reais per U.S. dollar.
Petroleo Brasileiro SA (Petrobras) shares fell 0.22 percent on big volume. Earlier in the session, Petrobras fell as much as 4 percent.
The stocks of mining and steel companies like Caemi, Usiminas and Companhia Siderurgica Nacional slid more than 2.5 percent and were among the biggest decliners in the Bovespa index for the second straight session.
Investors continued to reduce their positions in the sector on signs that steel demand from China and other parts of the world may not prove as strong as initially thought, analysts said. They fear high international oil prices may hurt the outlook for global economic growth.
Wall Street also added to the Bovespa's poor performance, as crude futures in New York hit a record $54.88 per barrel before easing at the close.
Despite the decline, analysts said the Bovespa found strong support in the 23,000 level, below which the index has not closed since the beginning of October.
"The Bovespa will be hard pressed to close below the 23,000 point level, which was a very strong resistance and now has became a floor," said Mauricio Gallego, a fund manager at Concordia brokerage in Sao Paulo.
PETROBRAS DISAPPOINTS
Petrobras said earlier it would raise its refinery prices by 2.4 percent for gasoline and by 4.8 percent for diesel as of Friday.Analysts, who expected a price hike of about 10 percent, said the government could be avoiding bigger rises before the second round of the municipal elections later this month.
Petrobras is free to set its own prices, but experts say the government has de-facto control over the state firm's prices.
"There is still a lag between local and international gasoline and diesel prices of about 20 percent and 18 percent respectively," said Ana Paula Almeida, an analyst at Tendencias consultants in Sao Paulo.
"But we believe there will be another gasoline hike this year," she added.
(From Reuters, October 14, 2004)
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