Argentine stocks jump, peso firms on farm hopes

Reuters: [2008-05-19 23:18:00]

BUENOS AIRES, May 19 (Reuters) - Argentine stocks jumped on Monday, and the peso currency and bonds firmed as investors hoped farmers and the government would soon end a prolonged conflict over soy export taxes.

The benchmark MerVal index <.MERV> added 2.67 percent to 2,194.11 points. On the broad market, volume was brisk at $35 million. Of active issues, 59 advanced, 16 declined and nine ended unchanged.

Shares in Grupo Financiero Galicia <GFG.BA>, which controls Argentina's biggest bank, soared 6.0 percent to 1.93 pesos per share.

"The Merval focused on growing expectations regarding talks between the agricultural sector and the government. This expectation especially favored government debt and bank shares," said Francisco Marra, analyst with Bull Markets Brokers in Buenos Aires.

The farm strike has hammered Argentine bonds, and since local banks have obligations to hold government debt, when prices of those bonds fall so do bank shares.

On Monday farm leaders were meeting to consider whether to lift their protest over oilseed export taxes that the government hiked in March.

Farmers have been holding back grains for export and their strike has caused a political crisis by challenging President Cristina Fernandez's economic policy, and threatens to slow overall economic growth.

Government bonds on the local market rose 1 percent on average on Monday after falling sharply last week. The peso-denominated par bond rose 2.3 percent while the Boden 2014 in dollars rose 2.2 percent, traders said.

The peso currency gained 0.7 percent to 3.210/3.215 per U.S. dollar <ARSB=> in informal trade between foreign exchange houses as measured by Reuters. In formal interbank trade the peso slipped 0.08 percent to 3.1475/3.1500 per dollar <ARS=RASL>.

The central bank sold dollars last week to prevent a slide in the peso as Argentines jittery over the farm crisis sought save haven in greenbacks.

Traders said the peso had not been under pressure on Monday as investors expect a resolution to the farming crisis, but that the Central Bank intervened at the end of the session with some dollar sales to mark the closing price. (Reporting by Walter Bianchi, writing by Fiona Ortiz; Editing by Leslie Adler) ((Reuters Messaging: fiona.ortiz.thomsonreuters.com@thomsonreuters.net; e-mail: buenosaires.newsroom@thomsonreuters.com; +54 11 4318-0663)) Keywords: MARKETS ARGENTINA/

Chile stocks rise on electric sector, peso slips

Reuters: [2008-05-19 22:50:00]

(Adds quote, closing stock figures)

SANTIAGO, May 19 (Reuters) - Chilean stock indexes closed higher for a fourth consecutive session on Monday, as rainfall buoyed investor hopes that hydroelectric energy supplies would help soften the current energy shortage.

The peso slipped against the dollar as the central bank continued its daily purchase of greenbacks.

The all-market IGPA index <.IGPA> gained 0.84 percent to 13,997.42 points, while the blue chip IPSA index <.IPSA> advanced 1.05 percent to 2,995.05 points, preliminary closing figures showed.

"The market is rising mainly on Soquimich and the electricity sector. Investors saw that electric sector multiples were way below historic levels," said Rodrigo Martin, head of research with the Banchile brokerage. "News of heavy rains in the south probably generated buying too."

Short energy supplies have taken a bite out of Chile's economic growth potential, as drastic cuts in natural gas from Argentina and lower hydroelectric reservoir levels caused by scant rainfall have caused costs to soar

"I think it's still too early to assume we're out of the woods, because one day of rain is not going to solve the problem."

Endesa Spain's <ELE.MC> regional investment arm Enersis <ENE.SN> rose 1.6 percent while generating subsidiary Endesa Chile <END.SN> advanced 2.58 percent. Endesa Chile is heavily hydro-dependent and the two companies together are weighted at about 15 percent of the IPSA.

Both stocks surged on Friday as investors snapped up ADR shares after Enersis was recommended on a televised U.S. investment show.

Locally owned generator Colbun <COL.SN> also rose 2.35 percent, to 89 pesos a share.

Blue-chip percentage gains were led by fertilizer exporter SQM <SQM_pb.SN> <SQM.N>, with a surge of 6.8 percent.

Giant regional retailers also helped pull indexes higher, as Falabella <FAL.SN> gained 1.56 percent and Cencosud <CEN.SN> rose 1.23 percent.

Of Chile's 40 blue-chip stocks, 24 closed higher, 13 fell and three were unchanged.

The Chilean peso <CHILJ> <CLP=CL> slipped 0.19 percent to close at 467.10/467.40 per dollar compared with Friday's close at 466.20/467.50.

The central bank on Monday continued with its daily purchase of $50 million on the currency exchange as part of an $8 billion intervention to curb the strength of the peso, which has gained 6.6 percent against the greenback this year. (Reporting by Lisa Yulkowski; Editing by Dan Grebler) ((lisa.yulkowski@reuters.com; +56-2-370-4290)) Keywords: MARKETS CHILE/

Mexico peso firms to 5-year high on rates view

Reuters: [2008-05-19 22:48:00]

(Recasts; adds quotes, closing prices)

MEXICO CITY, May 19 (Reuters) - Mexico's peso firmed on Monday to a five-year high on growing expectations the central bank will raise interest rates, while stocks jumped as investors bet the U.S. economy might avoid sinking into a recession.

The peso <MXN=> <MEX01> strengthened 0.38 percent at the official central bank close to 10.3755 per dollar, its best since July 2003. The benchmark IPC index <.MXX> gained 0.98 percent to close at 31,796.41 points.

Mexico's central bank held interest rates steady on Friday, with policy-makers saying the were concerned about a spike in inflation but also that they saw higher risks to economic growth from the U.S. slowdown.

Some investors have interpreted the bank's comments as a sign that policy-makers could be preparing for a rate hike later in the year to fight inflation.

"There is a greater chance that the central bank could raise rates than they could lower them," said Alejandro Martinez, a currency and fixed-income analyst at HSBC in Mexico City.

The peso has strengthened more than 5 percent this year as the U.S. Federal Reserve slashed interest rates while Mexico held borrowing costs steady, making peso-denominated assets more attractive to yield-hungry investors.

The spread between the U.S. target rate and Mexico's key rate is now at 5.5 percentage points.

In debt trading, the government's benchmark 10-year peso bond <MX10YT=RR> rose 0.132 of a point in price to bid 98.059, pushing its yield down 2 basis point to 8.04 percent.

On the stock market, shares gained as U.S. economic data signaled that the United States, Mexico's top trading partner, is likely to avoid a debilitating recession.

A report on Monday from the Conference Board, a private business research group, said its Leading Economic Indicators index rose 0.1 percent in April, the same as in March.

"Investors are perceiving that the risk of a recession in the United States is disappearing," said Gerardo Copca, an analyst at Metanalisis consultancy in Mexico City.

Shares of Cemex <CMXCPO.MX>, the biggest U.S. cement supplier, led the rally, climbing 3.15 percent to 33.06 pesos while its New York traded shares <CX.N> jumped 3.54 percent to $31.87.

Analysts said Cemex shares were getting a boost from surprisingly strong U.S. housing starts data released on Friday, and from optimism that Cemex could benefit from a government infrastructure push, analysts said.

Top retailer Wal-Mart de Mexico (Walmex) <WALMEXV.MX> rose 1.35 percent to 45.65 pesos. (Reporting by Michael O'Boyle, Lizbeth Salazar and Vanessa Padilla; editing by Gary Crosse) ((michael.oboyle@reuters.com; +5255-5282-7160; Reuters Messaging: catherine.bremer.lange.reuters.com@reuters.net)) Keywords: MARKETS MEXICO/

Brazil steelmakers lead stocks higher, real drops

Reuters: [2008-05-19 22:40:00]

(Updates to close)

SAO PAULO, May 19 (Reuters) - Brazil stocks rose to on Monday, hitting a record high for a second straight session, buoyed by gains in steelmakers and oil giant Petrobras, while the national currency weakened as investors took profits after a rally last week.

The Bovespa index <.BVSP> of the Sao Paulo stock exchange rose 0.92 percent to 73,438.83 points. The index has gained about 14 percent since the start of the year after surging 43.5 percent in 2007.

Steelmakers Usiminas, CSN and Gerdau rose after Citigroup reiterated a "buy" rating for Brazil's steel companies on expectations that higher metals prices later this year and in 2009 will fuel earnings growth.

The currency, the real <BRBY>, weakened 0.49 percent to 1.65 per U.S. dollar, after surging 2.7 percent last week to close on Friday at its strongest level since Jan. 20, 1999.

Joao Medeiros, partner at the Pioneer brokerage, said Monday's drop was temporary.

"There were some outflows...but it's not a big shift," Medeiros said.

Interest-rate futures <0#DIJ:> on the BM&F commodities and futures exchange were mostly higher after economists in a weekly central bank survey raised their forecast for the benchmark IPCA consumer price index for 2008.

At the stock exchange, steel shares surged for a second session after Citigroup's recommendation for the steel sector, even after more than 50 percent gains for several stocks this year.

Gerdau <GGBR4.SA>, Brazil's biggest producer of long-rolled steel, soared 3 percent to 82.44 reais, while CSN <CSNA3.SA> gained 1.28 percent to 84.37 reais and Usiminas <USIM5.SA> climbed 1.5 percent to 94.6 reais.

State-controlled oil giant Petrobras <PETR4.SA> jumped 3.84 percent to 50 reais as international crude prices firmed after OPEC said it was unlikely to boost oil supply.

Petrobras also said on Monday an onshore well struck oil in the Espirito Santo basin, but it was too early to estimate the reserves or production viability.

Real estate developer Rossi Residencial <RSID3.SA> slumped 5.33 percent to 14.75 reais. Deutsche Bank cut its recommendation for Rossi shares to "hold" from "buy," citing "overall low earnings estimate visibility and confidence due to poor communication of anticipated financial performance."

Deutsche also cut its 12-month price target for Rossi shares to 19.3 reais from 25 reais. (Reporting by Elzio Barreto and Fabio Gehrke; Editing by Leslie Adler)

((elzio.barreto@thomsonreuters.com; +55 11 5644-7725; Reuters Messaging: elzio.barreto.reuters.com@reuters.net)) Keywords: MARKETS BRAZIL/

GLOBAL MARKETS-World stocks at 4-month highs despite rising oil

Reuters: [2008-05-19 22:20:00]

(Adds close of U.S. markets)

* World stocks at four-month high, lifted by energy stocks

* Crude oil prices zig-zag, close above $127 a barrel

* Emerging market stocks at new high, wipe out 2008 losses

By Herbert Lash

NEW YORK, May 19 (Reuters) - Stocks rose to four-month highs around the world on Monday as crude oil trading near record highs boosted energy shares, but U.S. technology shares turned negative after a chip maker said the record oil prices are likely to hurt consumer spending.

Oil closed at a record above $127 a barrel after OPEC's president insisted the producer group would not increase output at its next meeting in September.

Crude's relentless rise bolstered energy-related stocks in Asia, Europe and the United States. Exxon Mobil, the largest publicly traded oil company, led a key U.S. stock index higher.

Emerging market equities hit a high for the year, wiping out their 2008 losses in a new bout of investor confidence.

An economic forecasting gauge that showed the U.S. economy, while weak, has so far managed to avoid recession helped the dollar rebound from a two-and-a-half-week low against the euro. The Conference Board's Leading Economic Indicators index showed a slight April gain of 0.1 percent.

"There's a realization that we haven't seen, at least to date, a significant economic impact from the high oil prices and there is a general comfort level with the economic data," said Michael James, senior trader at regional investment bank Wedbush Morgan in Los Angeles.

The Dow Jones industrial average <.DJI> rose 41.36 points, or 0.32 percent, at 13,028.16. The Standard & Poor's 500 Index <.SPX> added 1.28 points, or 0.09 percent, at 1,426.63. The Nasdaq Composite Index <.IXIC> fell 12.76 points, or 0.50 percent, at 2,516.09.

With energy prices heading higher recently and the economy still growing, investors looked for companies that can do well in an inflationary environment.

Shares of big manufacturers, including Caterpillar Inc <CAT.N>, also rose, and Exxon was the biggest contributor to the Standard & Poor's 500 Index's upturn.

Technology shares, however, fell after the chief executive of semiconductor maker SanDisk Corp. <SNDK.O> warned on consumer spending levels. CEO Eli Harari told Reuters on the sidelines of a conference in Boston that "with the oil prices hitting $127 a barrel, discretionary spending is going to be affected."

Shares of SanDisk slumped 7.5 percent, while top chip maker Intel Corp <INTC.O> fell 0.5 percent, and No. 2 maker Advanced Micro Devices <AMD.N> lost 2.2 percent.

In Europe energy stocks were among the top weighted gainers. Total <TOTF.PA> rose 3.1 percent and Royal Dutch Shell <RDSa.AS> added 3.2 percent. Among miners, Vedanta <VED.L> added 8.5 percent and Anglo American <AAL.L> gained 4 percent.

The FTSEurofirst 300 <.FTEU3> index of top European shares closed 0.96 percent higher at 1,378.29, its fourth positive day in a row and highest close since Jan. 16. Gains in mining and oil shares led the UK's FTSE 100 index <.FTSE> up 1.2 percent.

Markus Steinbeis, head of European equities at Pioneer Investments in Munich, said oil and mining stocks are "one way of protecting your portfolio from a higher inflation."

Steinbeis added: "Many market participants are preparing for rising inflation. They are looking for companies with strong pricing power, which can easily pass on higher prices."

The equity markets were buoyed early by comments from officials in the euro zone's two largest economies -- Germany and France -- that were optimistic.

France is on track to meet a target of between 1.7 percent and 2 percent economic expansion in 2008, said Economy Minister Christine Lagarde. Germany surprised analysts and grew 1.5 percent from January to March, its strongest quarterly expansion since 1996.

Crude oil in New York settled higher at a record close above $127 a barrel in volatile trade before Tuesday's expiration of futures contracts for June.

Near the close, prices fell more than a dollar and then bounced nearly the same, buffeted by pre-expiry selling and a rebounding dollar, as was the case for most of the session.

"Market is still in bull mode technically, leading to additional upside follow-through," said Tom Bentz, an analyst at BNP Paribas Commodity Futures Inc, commenting on the early strength above $127.

Crude <CLM8> for June delivery settled up 76 cents at $127.05 a barrel, after trading from $125.28 to $127.77, just shy of Friday's record high of $127.82.

In London, July Brent crude <LCON8> ended up 7 cents at $125.06 a barrel. Brent crude hit a record $126.34 on Friday.

U.S. Treasury debt prices pared losses and rose in thin trade volume after SanDisk's warning about consumer spending hurt technology shares and bond investors reacted accordingly.

The benchmark 10-year U.S. Treasury note <US10YT=RR> rose 6/32 to yield 3.83 percent. The 2-year U.S. Treasury note<US2YT=RR> rose 4/32 to yield 2.40 percent. The 30-year U.S. Treasury bond <US30YT=RR> rose 6/32 to yield 4.57 percent.

The dollar rose against major currencies, with the U.S. Dollar Index <.DXY> up 0.40 percent at 73.057.

The euro <EUR=> fell 0.44 percent at $1.5506, and against the yen, the dollar <JPY=> rose 0.27 percent at 104.31.

U.S. gold ended higher above $900 an ounce after scaling a near-four week peak on the back of inflation fears sparked by record high crude prices.

The June gold contract <GCM8> in New York settled $5.90 higher at $905.80 an ounce, boosted by the metal's inflation hedge appeal as oil settled at record over $127 a barrel.

Gold's close above $900 should lead futures to test the next resistance area of around $925 an ounce, traders said.

MSCI's benchmark emerging market share index <.MSCIEF> rose to a new 2008 high of 1250.99, wiping out all its losses this year.

Asian shares hit a new four-month high as a relentless rise in oil prices bolstered resource shares.

MSCI's measure of Asian stocks outside Japan <.MIAPJ0000PUS> rose 0.4 percent, the sixth consecutive session it has gained. The index earlier hit its highest level since mid-January, but is still down about 5 percent for the year.

Tokyo's Nikkei average <.N225> and shares in Taiwan <.TWII> and Hong Kong <.HSI> gained less than 0.5 percent each. (Reporting by Kristina Cooke, Ellen Freilich and Steven. C. Johnson in New York and Lewa Pardomuan and Jane Merriman in London; Editing by Leslie Adler) ((herb.lash@thomsonreuters.com; +1 646 223 6019; Reuters Messaging: herb.lash.reuters.com@reuters.net)) ((Multimedia versions of Reuters Top News are now available

for: * 3000 Xtra: visit

http://topnews.session.rservices.com

* BridgeStation: view story .134

For more information on Top News:

http://topnews.reuters.com. Editing by Richard Satran)) Keywords: MARKETS GLOBAL