By Carla Mozee
Brazilian stocks fell Monday as investors moved with caution as
strategists continued to raise expectations for higher inflation
ahead of the central bank's interest-rate meeting this week.
Brazil's Bovespa fell 0.9% to 68,871, its first loss since April
19. The index is now up 0.4% on a year-to-date basis.
Few stocks on the index gained ground. Packaging producer Klabin
(KLBAY) rose 2.8% and chemicals maker Braskem (BAK) rose 1.2%.
Among heavily weighted resource stocks, shares of steel maker
Gerdau (GGB) lost 0.5%, iron ore producer Vale (RIO) fell 0.5% and
oil producer Petrobras (PBR) down 2% as crude oil for June delivery
fell 1.1% to $84.20.
Oil prices were weighed by weakness in the euro against the
dollar on concerns that Germany may be slow in providing financial
aid to debt-strapped Greece. German Chancellor Angela Merkel said
assistance will be given to its euro-zone partner only if it's
absolutely necessary, and that Greece needs to meet certain
conditions.
In Brazil early Monday, a weekly survey released by the central
bank showed economists and strategists, on average, expect
inflation as measured by the IPCA index to end at 5.41% this year,
up from last week's reading of 5.32%. The forecast remains above
monetary policy makers' yearly inflation target of 4.5%.
Readings on consumer prices and inflation have been moving
higher amid recovery from recession in Latin America's largest
economy.
With the central bank facing rising inflationary pressures, the
survey showed strategists now also expect the key Selic interest
rate to be raised to 11.75%, compared with last week's consensus
estimate of 11.25%. The Selic currently stands at a record low
8.25%.
But Brazil's currency rose as investors positioned themselves
ahead of a possible rate hike late Wednesday. The real rose to
1.745 per dollar compared with 1.762 on Friday. Strategists polled
in the central bank's survey still expect the real to reach 1.80 by
year's end.
Elsewhere in the region, Mexico's IPC index fell 0.2% to
33,771.55, with shares of market heavyweight America Movil (AMX)
down 0.2%, fixed-line operator Telmex (TMX) off 0.9% and copper
miner Grupo Mexico lower by 1.2%.
But losses were limited in part by a 0.5% gain in shares of
Walmex (WMMVY) and a 0.4% gain in shares of Cemex (CX). The cement
maker was slated to release first-quarter results on Tuesday.
Chile's IPSA fell 0.2% to 3,826.93 and Argentina's Merval fell
0.1% to 2,472.71.