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Brazil stocks end up, Banespa jumps on privatization date

SAO PAULO: Brazilian stocks rallied Monday after the government set a firm privatisation date for Banespa bank, boosting the bank's stock and paving the way for gains across the board, traders said.

The Sao Paulo Stock Exchange's leading stock index finished 4.4 percent higher at 17,022 points, a hair's breadth below the record high of 17,092 made on the last day of trading in 1999.

"The highlight was Banespa," said Tomas Taterka, head of trading at Banco Cidade. "But the market was itching for more rises anyway," he said, adding that Banespa was only a catalyst in a market raring to go higher.

Shares in Banespa, or Banco do Estado de Sao Paulo, jumped nearly 10 percent in early trade after the Central Bank published a statement setting the coveted bank's much-awaited privatisation date on May 16. The auction comes almost two years behind schedule.

The bank's sale, which is being eyed by Brazil's top three private banks Bradesco, Itau and Unibanco, had been mired in controversy until Sao Paulo state and Brasilia closed a debt deal late last year to fully transfer Banespa to federal hands.

Banespa had been valued at 5.6 billion reais ($3.3 billion) at the moment of transfer, but the stake in the bank that would come under the hammer has not yet been determined.

Banespa's stock ended the day 7 percent higher at 69.50 reais.

A handful of mining and steel shares also stood out Monday, with the world's No.1 iron ore miner Cia Vale do Rio Doce (CVRD) surging 10 percent to 52.20 reais. Steelmakers Acesita, Belgo Mineira, and Usiminas also jumped 9 percent, 12 percent and 10 percent respectively.

CVRD and the steelmakers rose on analysts' expectations their 2000 earnings would improve from last year, when a devaluation of the local currency made the companies' dollar-denominated debt more difficult to pay, traders said.

Traders said buying were still limited to local investors. Funds and foreigners were only slowly entering the Brazilian stock market, which flew more than 150 percent in local currency terms last year, or 69 percent in dollar terms.-Reuters