SAO PAULO--Brazil stocks opened weaker Wednesday as shares of
state-controlled utility Eletrobras continued to drag down the
index on the prospect of massive revenue losses.
The benchmark Ibovespa index opened at 56189, down 0.5% from the
previous close of 56451 on Monday. Markets were closed Tuesday for
a local holiday.
Centrais Eletricas Brasileiras (EBR, ELET6.BR), or Eletrobras,
plunged for a third day Wednesday, with preferred shares and voting
shares losing 13%. Brazil's government is demanding that utilities
slash their power prices in exchange for a renewal of operating
licenses. Eletrobras has said it will lose close to BRL10 billion
in annual revenue by renewing the licenses and, while some
companies have said they won't renew in order to avoid operating at
a loss, investors expect Eletrobras -- in which the government has
a 51% stake -- to renew the licenses.
Also pulling down the market was mobile-phone provider Tim
Participacoes (TIMP3.BR), which was recently barred by
telecommunications regulator Anatel from selling a new service
plan. The Brazilian unit of Telecom Italia SpA (TIT.MI, TI) can't
sell its new plan because Anatel said there was "potential
instability in the network" and potential "damage to the quality of
service" for all of TIM's users as a result of the Infinity Day
promotion. Tim slipped 2.6% to BRL7.53.
Brazil's blue-chip stocks were mixed in early trading as global
markets reacted to mixed news from Europe. While Germany signaled
its willingness Wednesday to provide additional financing for the
euro zone's bailout fund, the failure of Euro-zone ministers to
reach a solution to the Southern European country's debt woes after
a 12-hour meeting weighed on investors.
State-controlled oil producer Petroleo Brasileiro (PETR4.BR)
climbed 1% to BRL19.32, while mining company Vale (VALE5.BR)
slipped 0.3% to BRL34.95.
Government-controlled lender Banco do Brasil (BBAS3.BR) dropped
0.4% to BRL20.86, while rival Itau Unibanco Holding (ITUB4.BR) fell
0.2% to BRL30.90.
Airplane maker Embraer (EMBR3.BR) added 1.4% to BRL14.
Steelmaker Usiminas (USIM5.BR) rose 0.9% to BRL11.49, while
rival CSN (CSNA3.BR) was unchanged at BRL10.23.
Write to Paulo Winterstein at paulo.winterstein@dowjones.com
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