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Brazil shares end off 2 pct on fiscal disappointment

RIO DE JANEIRO: Brazilian shares ended off 2 percent on Friday, dragged down by profit-taking in two key stocks and disappointment over the latest government budget surplus figures, traders said.

Sao Paulo's benchmark Bovespa index closed at 18,280 points, falling 1.9 percent during a week that was cut in half by Carnival holidays. After shooting up 2 percent the day before, the market retreated on Friday following the release of the central government's January budget surplus.

"The primary surplus wasn't exactly bad but it was lower than expected," said Tomas Taterka, head trader at Banco Cidade in Sao Paulo.

The central government posted a primary surplus of 1.457 billion reais in January, sharply higher than the 882 million real surplus posted in the same month last year, but below some economists' expectations.

Constantin Jancso from MCM consulting firm had forecast a primary surplus of 1.8 billion reais.

Sharp declines in Eletrobras and Petrobras blue chips set the tone on Friday as investors dumped the stocks following huge gains the day before.

State-owned energy company Eletrobras closed off 9.6 percent at 35.21 reais after shooting up 20 percent at the end of the day on Thursday in speculative trade. State oil giant Petrobras ended off 2.9 percent at 497 reais, shedding some of its 3.5 percent gains the day before.

Telebras preferred receipts, the most heavily traded shares on the Bovespa, closed down 2.4 percent at 270.49 reais.

Long-distance telephone carrier Embratel bucked the market's downward trend, closing up 3.3 percent at 52.29 reais after Salomon Smith Barney analyst Patrick Grenham raised his price target on the stock.

Markets were closed on Monday, Tuesday and half-day on Wednesday for Carnival and even on Friday trading was still weak at 523 million reais, compared with average daily volume of 965 million reais in February.

"Really nothing much happened today," said one local trader. "The market is taking profits and volume was low due to Carnival week."-Reuters