By Carla Mozee
Brazilian stocks led Latin American equity advancers Tuesday,
led by gains in Perdigao SA after a broker hiked its rating on the
meatpacker.
Brazil's Bovespa rose 1% to 38,970.88, following two sessions of
losses.
The iShares MSCI Brazil Index Fund (EWZ) rose 1.2%, also moving
toward its first win in the three sessions.
Shares of Brazilian market heavyweight Petrobras (PBR) rose 1.5%
as oil surged nearly 4% to $49.13 a barrel, its best finish since
Dec. 1.
Investors focused on a report that U.S. housing starts
unexpectedly jumped 22%, pushing to the background expectations
that U.S. crude inventories rose last week. Trading was also
volatile ahead of the expiration of options.
Perdigao (PDA) shares were the strongest of Brazil's price
performers on Tuesday, up 7.6% after Credit Suisse upgraded the
company to an outperform rating from neutral, saying that its
shares are trading below historical valuation.
"We don't believe [Perdigao] is pricing-in likely market share
gains in both domestic and export markets, caused by a continued
weakening in smaller competitors' positioning," wrote analyst
Marcel Moraes in a note Tuesday.
He said the company faces short-term challenges due to demand
for protein in from export markets, but that it's "the
best-positioned Brazilian food company to face any
adversities."
Shares of competitor Sadia (SDA) were up 4.2%. Moraes said
Brazil's development bank, or BNDES, could bring the Perdigao and
Sadia "closer together, creating one of the leading food
companies," if the bank were to become involved helping Sadia deal
with 3.5 billion reals in short-term debt that's due in the third
quarter of this year.
Fellow meatpacker JBS saw its shares rise 0.7%.
The Bovespa's gains on Tuesday were capped by decline in steel
stocks amid a spate of downbeat developments from the metals
sector, including Anglo-American mining firm Rio Tinto's(RTP) view
that it's unlikely that metals prices will rebound this year.
Also, aluminum giant Alcoa Inc. (AA) slashed its dividend in a
move to save money amid a "prolonged" downturn, and U.S.-based
steel maker Nucor Inc. (NUE) warned that it will swing to
first-quarter loss.
"The economy has fallen off a cliff -- and there is no
visibility as to the timing of the recovery," said Nucor in a
statement.
In Sao Paulo, shares of steel maker Gerdau (GGB) fell 1.9%,
Usiminas fell 2.4%, and CSN (SID) shed 0.5%. But Vale (RIO), the
world's largest producer of iron-ore, a key component in steel
production, managed to shake off earlier losses and rise 0.3%.
Argentina's Merval index rose 1.1% and Chile's IPSA gained
1%.
Mexico slips
Mexico's IPC slipped 16 points, or 0.1%, at 19,414.39, after
markets were closed Monday for a holiday.
Telecom stocks traded in the red, with shares of wireless
services provider America Movil (AMX) down 2.3%, Telmex (TMX) fell
4.2% and Carso Global Telecom off 0.9%.
Shares of cement maker Cemex (CX) fronted decliners, with a loss
of 7.3%.
Elsewhere in Mexico, the government is reportedly expected on
Wednesday to outline about 90 agricultural and industrial goods
imported from the U.S. that will be subject to new tariffs.
The move by Mexico, which could affect about $2.4 billion worth
of goods, follows a decision by the U.S. to stop a pilot program
that had allowed a limited amount of long-haul trucks from Mexico
to travel in the U.S. Mexico said the cancellation of the program
violates terms of the North American Free Trade Agreement.
The products facing tariffs won't include the key food staples
of corn, wheat, rice and beans.
"This will undoubtedly be high on U.S. Secretary of State
Hillary Clinton's agenda when she visits the country next week,"
wrote Marion Barbel and James Auger, analysts at IHS Global Insight
on Tuesday.
"At the same time, the [Obama] administration has run into
international controversy over the "Buy American" clause in the
fiscal stimulus package. Its position on free trade thus remains
somewhat ambiguous; the current spat with Mexico should give a
clearer picture of where it really stands."
