Brazilian stocks fell at the open on Thursday after the country's benchmark inflation index accelerated more than expected, reinforcing views the central bank will hike interest rates next week.

The Bovespa index fell 0.58 percent to 23,319 points, with more traders betting on a half percentage point hike to 17.25 percent for the benchmark Selic rate next Wednesday, when the central bank concludes its two-day monthly monetary policy meeting. Economists expect a hike of at least a quarter percentage point.

The IPCA consumer price index rose 0.44 percent in October, more than 0.33 percent in September and the 0.42 average forecast in a Reuters survey of 10 economists. Importantly, core inflation, which excludes extraordinary items, rose 0.60 percent in October -- a sign the market interpreted as bearish.

The currency market was calmer, with Brazil's real 0.14 percent stronger against the U.S. dollar at 2.821 two hours after opening. Local currency traders were closely watching developments with the U.S. dollar, which hit record lows against the euro this week.

(From Reuters, November 11, 2004)

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