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Brazil shares end up 2.5 pct, tracking Wall Street

SAO PAULO: Brazilian shares closed up 2.5 percent in heavy trade on Wednesday, ending two days of steep losses as investors resumed a spending spree that pushed stocks to all-time highes at the end of 1999, traders said.

Sao Paulo's key Bovespa index rose to 16,245 points, boosted by strong gains on Wall Street where stocks were trading up 2 percent. The Bovespa rebounded from morning losses of over 3 percent and began to recover from a 7.3 percent slide over the last two days.

"Yesterday and this morning the market overreacted," said Roberto Dotta Filho, a fund manager at Tudor brokerage in Sao Paulo. "But it produced an excellent buying opportunity."

Bourses around the globe tumbled on Tuesday on fears another U.S. rate increase could lure investors out of stocks and raise borrowing costs. Rate concerns will likely come back to haunt the market, traders said.

But for the moment, the temptation of lower prices lured investors back into the Brazilian exchange in big numbers. Volume was strong at 1.1 billion reais, compared with average daily trading of 916 million reais in December.

Steel companies and potential players in the country's burgeoning Internet market led the rally after suffering some of the biggest hits the day before.

Cable TV operator Globocabo, which recently announced the launch of a high-speed Internet network, closed up 7.8 percent at 3.06 reais. Long-distance operator Embratel, which has the biggest fiber optic network in Brazil, closed up 5.4 percent at 42.70 reais.

Energy transmission firms which are also expected to do business in the Internet industry surged. Cia Transmissao de Energia Eletrica Paulista rose 13.6 percent to 6.19 reais and EPTE rose 5.9 percent to 13.90 reais.

Steelmakers also rallied on expectations of higher margins in 2000 as commodities prices rise. Usiminas ended up 12.3 percent at 28.40 reais. Cia Siderurgica Nacional closed up 5.4 percent at 78 reais.

The Bovespa has still slumped a total 5 percent in the first three days of the year after stellar gains of 152 percent in 1999.-Reuters