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Brazil shares dip on profit-taking in telecoms

SAO PAULO: Brazilian shares retreated on Tuesday, dragged down by telephone stocks in a bout of profit- taking after four consecutive days of gains that had taken them and the benchmark index to new record highs, traders said.

Sao Paulo's key Bovespa stock index ended down 0.8 percent at 17,903 points in strong trade, also weighed down by a decline on Wall Street where stocks fell more than 1 percent.

"We're seeing some profit-taking," a trader at Finambras brokerage said. "Telecoms had risen sharply and now they are coming back down some, bringing the market with them."

Tele Norte Leste and Tele Centro Sul fell 4.8 percent to 51.83 reais and 1.4 percent to 35.01 reais, respectively.

Both companies had surged in recent days on speculation they will get spillover investors who are forced to leave Brazilian units of Telefonica when the Spanish giant buys outstanding stocks in a share swap programme.

Tele Norte Leste soared 25 percent in less than a week, followed closely by Tele Centro Sul. Telebras receipts, the heavily-traded basket of 12 telephone stocks that surged 18 percent in the same period, closed down 2.1 percent at 257.60 reais.

Still, Brazil's potential Internet players bucked the market's downward trend, attracting investors in big numbers and bringing total volume to 1.02 billion reais ($567 million), compared with daily average trade of 980 million reais in December.

"There was demand for Internet companies and related shares," one local trader said. "The standout was Globocabo."

Pay TV operator Globocabo, which recently announced a high- speed Internet network, ended up 7.2 percent at 3.44 reais. Similarly, electricity transmission firm EPTE, which is expected to break into the business, closed up 2.8 percent at 13 reais.

Despite Tuesday's small losses, the Bovespa is still up 4.7 percent so far this month. -Reuters