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Brazil stocks close lower on more profit-taking

SAO PAULO: Brazilian shares fell 1.5 percent on Wednesday in another sluggish session where profit-taking prevailed following recent rises, leaving the main stock index just above its support level, traders said.

"It was just another bad day for the market, with zero flows from abroad and low flows here," said Tomas Taterka, chief trader with Banco Cidade. "People are worried there is more room for profit-taking, but there is so far no big change in the general sentiment."

The Sao Paulo Stock Exchange's leading share index Bovespa finished down 1.5 percent, at 18,053 points, or just above the 18,000 mark, widely seen as a support level for the market. Trading volume was only around 600 million reais, half of last month's daily average.

"Only two days ago the market tested levels close to 19,000 and now it rolled back -- this is pretty natural," said another trader, who said sharp losses in technology-heavy U.S. index Nasdaq had also contributed to the Bovespa fall.

Initially, the market recovered slightly from deep losses the day before, boosted by a cut in the Central bank's benchmark interest rate for the first time in six months to 18.5 percent from 19 percent.

However, lingering profit-taking and Nasdaq declines brought the Bovespa down.

Votorantim Celulose e Papel was among the day's few gainers. The paper staged a rally, rising almost 10 percent to 63 reais after the company announced it was launching level 3 American Depository Receipts.

Jet maker Embraer, which reported on Wednesday that it tripled its profits in 1999 from the previous year, also rose by 2.5 percent to 8.3 reais.

As anti-trust board Cade failed to come up until the market's close with a ruling on the merger of Brahma and Antarctica into Ambev, Brahma's stock erased the day's gains, closing 0.7 percent lower at 1,301 reais.

The merger would create the world's third largest brewer. Brahma shares have risen nearly 40 percent since July, when it first announced its merger plan.

Traders also pointed out at a 2.7 percent rise in Globocabo TV and Internet firm, which came after a long period of losses, and which they attributed to a price correction.

"Globocabo has been pretty low recently, not recovering with the rest of the market when it was on the rise. Now there is some technical readjustment to it (Globocabo)," said Marcelo Porto of Concordia brokerage.

The Bovespa is still 5.6 percent up since the start of the year, and 2.2 percent up so far in March.-Reuters