Brazil's Bovespa Rises on Fed's Liquidity Plan: Latin Stocks

Dec. 12 -- Brazil's main stock index rose as global growth concerns eased, after the U.S. Federal Reserve and four other central banks said they would add cash to the banking system to prevent a slowdown.

The Bovespa index of most-traded shares on the Sao Paulo exchange gained 1,179.30, or 1.8 percent, to 65,691.56 at 10:33 a.m. in New York. Petroleo Brasileiro SA paced the gain as oil rose in New York. Latin Stocks fell yesterday on concern the Fed's quarter percentage point cuts in its key interest rates were too small to stop the U.S. economy from falling into recession.

``That idea was thrown out with the action the Fed did today,'' Fernanda Mello, who helps manage the equivalent of $1.3 billion at Maua Investimentos in Sao Paulo. ``Now people can look at the Brazil's fundamentals, which are very good.''

Brazil's economy expanded in the third quarter at the fastest pace in more than three years, the government said today. The Fed is coordinating the measures with the European Central Bank, Bank of England, Bank of Canada and Swiss National Bank to ``elevate'' short-term funding pressures, the Fed said in a statement in Washington.

Petrobras, as Brazil's state-controlled oil company is known, gained 3.9 percent to 84.08 reais. Crude oil for January delivery jumped 2.5 percent after a U.S. government report showed inventories declined last week. Cosan SA Industria & Comercio, the world's largest sugar-cane processor, advanced 3.2 percent to 22 reais.

Chile's Ipsa index rose 0.8 percent to 3,191.82, led by Cencosud SA, on speculation that declines in the previous two days had left some stocks cheap as global credit fears subsided.

Welcome Injection

Investors welcomed the central banks' global cash injection to spur lending and economic growth, said Valentin Carril, who oversees $3 billion as chief executive officer of Principal Asset Management SA in Santiago.

``The main impact, especially in the very short term of one day, is a reduction of risk aversion globally,'' Carril said in a telephone interview today. ``Longer term, any resolution of this credit crunch means all companies in Chile are worth a lot more because Chile is a highly dependent on trade.''

Cencosud, Chile's biggest retailer that was given a ``buy'' rating at UBS AG yesterday, rose 1 percent to 1,965 pesos.

In other Latin American markets, the main indexes in Argentina and Colombia rose, while Venezuela's IBVC index and Peru's IGBVL fell. The MSCI index of Latin American shares rose 1.5 percent to 4,551.46. Markets in Mexico were closed for a public holiday.