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Brazil stocks end up 4.7 pct after US rate hike

SAO PAULO: Brazilian stocks ended up a brisk 4.7 percent on Tuesday on relief after the US Federal Reserve announced a widely-expected hike in interest rates, traders said.

The Sao Paulo Stock Exchange's leading share index Bovespa .BVSP closed at 18,343 points, also boosted by a two-percent jump in the Dow Jones industrial average. Tuesday's rally took the Bovespa's gain so far this month to 3.9 percent and 7 percent so far this year.

"The moment investors confirmed the size of the rate hike, they jumped to buy stocks," said Carlos Hokama, head of equities at Credibanco. "Needless to say, the US stock market rally is also helping sentiment."

The Fed said on Tuesday afternoon after its Federal Open Market Committee (FOMC) meeting that it was raising both the federal funds rate and discount rate by 25 basis points -- in line with what economists in Brazil and abroad had predicted.

Brazilian stock investors tend to become very cautious right before the FOMC announcement as any bigger-than-expected interest rate hike in the United States could damage capital flows into emerging markets.

The FOMC announcement pushed stocks up across the board in robust volume of 770 million reais ($444 million) Tuesday.

Bellwether telephone issue Telebras preferred led the surge with a 6.3 percent jump to 276 reais.

Rio de Janeiro land line telephone firm Tele Norte Leste, or Telemar, also rose 4 percent. Investors cheered the company's announcement that it planned to invest 700 million reais ($402 million) in Internet projects this year.

Telemar, along with other Brazilian phone companies, has surged in recent months on expectations it will be a big player in the Internet market, providing backbone and other services.

Minas Gerais state telephone operator Telemig shot up a breathtaking 31 percent to 9 reais. However, turnover was limited and traders and analysts could not point to a reason behind the price surge.

Brazil's top brewer Brahma bucked the general upward trend and fell 5 percent to 1,220 reais on a price correction.

Brahma had soared 11 percent late last week following a court ruling favourable to the beverage company's proposed merger with second-ranking brewer Antarctica. A final decision on the giant merger deal is expected at the end of this month. -Reuters