By Carla Mozee
Major Latin American stock markets jumped Thursday, with
investors finding relief from China's assurance that it's not going
to rid itself of European debt investments in light of the
euro-zone's fiscal crisis.
The Bovespa, tracking Brazilian blue chips, climbed 3.2% to
62,091.77. Investors also snapped up Brazilian stocks after the
country's unemployment rate in fell in April, a surprise result for
the markets.
Mexico's IPC rose 2.3% to 32,056.16 and Argentina's Merval
bounced 5.3% higher to 2,203.99. Chile's IPSA rose 0.7% to
3,812.25.
The regional markets rose alongside U.S. stocks after China said
it doesn't plan to sell some of its holdings in euro-denominated
debt. The S&P 500 Index (SPX) surged 3.3% and the Dow Jones
Industrial Average (DJI) leapt 285 points, or 2.9%, to
10,258.99.
"The vote of confidence that Chinese authorities gave the euro
... gave risk appetite a boost," wrote Nick Chamie, global head of
emerging-markets research at RBC Capital Markets in a late Thursday
note.
The euro (CUR_EURUSD) rose against the U.S. dollar for the first
session in four.
The euro was pushed below a key threshold of $1.22 and investors
pulled out of U.S. stocks on Wednesday after a news report that
China was mulling the sale of some of its European bond holdings.
But Mexican and Brazilian stocks managed to hold to higher ground
despite the setback on Wall Street.
Still, fears that the European debt crisis will interrupt global
economic recovery have heavily contributed to a downturn in
worldwide equity markets this month. The Bovespa, for instance, is
facing a loss of about 8%.
In Brazil on Thursday, the IBGE statistics agency said the
country's unemployment rate fell to 7.3% last month, better than
the market consensus for a rate of 7.5%. The rate registered at
7.6% in March.
Other indicators of a buoyant labor market, including business
and consumers surveys, "confirm the good prospects for consumption
and thus for GDP growth this year," wrote economist Luiz Cherman at
Itau Securities in a note.
With concerns that the economy is rebounding from recession too
strongly, the report will be considered by policy makers next week
at their meeting on the key interest rate. Policy makers recently
hiked the Selic rate to 9.5% from a record low 8.75%.
In trading action in Sao Paulo, shares of steel, industrial,
retail, home-building and transportation stocks took part in the
equities rally, with shares of air carrier Gol (GOL) up 3.3%. Steel
producer Usiminas rose 4.1% and Gerdau (GGB) gained 5.4% as prices
for metals rose.
Vale (RIO) stock jumped 6.3% as a unit of the iron-ore giant
will resume talks with labor leaders representing striking workers
at a nickel plant in Ontario, Canada. The talks with the United
Steelworkers union will begin on June 4. The strike at the plant
was launched last July.
In Mexico City, shares of America Movil (AMX) rose 1.5%. A
spokesman for the controlling shareholder in America Movil, Carlos
Slim, told Dow Jones Newswires that Slim is not in talks to buy a
stake in Portugal Telecom (PT).
Portuguese newspaper Diario Economico reported that Slim was
looking into the possibility of buying a stake in the company to
disrupt efforts by Spain Telefonica (TEF) to win control of
Portugal Telecom's stake in Vivo (VIV). Vivo is the biggest
wireless provider in Brazil.
Telefonica and Portugal Telecom are joint-venture partners in
Vivo. America Movil competes in Brazil through its Claro unit.