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Mexico, Brazil end higher
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January 26, 2000: 7:13 p.m. ET
Canadian telecom giant BCE sets Nortel spin-off; IPC and Bovespa close in plus column
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NEW YORK (CNNfn) - Brazilian stocks finished firmer Wednesday after shadowing share price movements on Wall Street amid persistent concerns about rising U.S. interest rates, traders said.
Mexican stocks drifted higher for the second consecutive session Wednesday, weathering a poor performance on Wall Street, although buying remained concentrated on a handful of blue chips.
Toronto's benchmark stock index was up about 0.91 percent on Wednesday, pushed higher by the banking and utility sectors.
Bovespa ends in plus column
In Brazil, the Sao Paulo Stock Exchange's Bovespa index of leading shares ended 0.8 percent higher at 17,105 points, in line with the Dow Jones industrial average. The U.S. blue-chip gauge was about 0.5 percent higher by the time the Brazilian bourse closed.
"The market was really just accompanying Wall Street," said Gabriel Jafet, fund manager at Oryx Asset Management. "The ongoing uncertainty over U.S. interest rates was making investors reluctant, especially with Greenspan speaking near the close."
U.S. Federal Reserve Chairman Alan Greenspan began an address to the Senate Banking Committee shortly before the Brazilian market closed, and investors were listening for clues to the Fed's thinking on interest rates.
Higher U.S. rates could lure foreign investment out of Brazil, making yields in the riskier emerging-market instruments less attractive.
A series of large transactions involving Brazilian electric utilities on Wednesday boosted the market's total turnover to 3 billion reals, or $1.8 billion.
Brazil's National Development Bank (BNDES) sold 1.9 billion reals ($1.1 billion) of shares in Eletropaulo Metropolitana, the majority of which went to the company's controlling owner, U.S.-based AES Corp. (AES). Metropolitana's preferred shares dipped 0.4 percent to 115.10 reals, with investors reading the increase in AES's stake as a possible precursor to a restructuring in the utility's ownership, traders said.
A similar BNDES auction of Light shares was also planned for Wednesday, but the results had not come out before the bourse's close. Light's common stock dropped 12 percent to 214.5 reals.
The Brazilian unit of U.S-based Duke Energy Corp. increased its stake in Paranapanema to 95 percent from 44 percent via a tender offer on the Sao Paulo bourse. Duke bought 515 million reals ($289 million) worth of stock in the Brazilian electric utility.
Paranapanema's preferred stock tumbled 23 percent to 8.3 reals, but traders said only two transactions were carried out on Wednesday.
After the close, the Bovespa was showing a gain of 0.08 percent this month after the index climbed to a record high of 18,099 earlier in the month.
Mexico's IPC finishes higher
Mexico's leading IPC index closed up a modest 33.06 points, or 0.48 percent, at 6,918.94 points. During the day it rose to 6,976.12 points and bottomed at 6,862.32.
The Dow Jones industrial average finished at 11,032 points, a marginal 0.03 percent higher.
"The market managed to stay above the 6,900 point level by just a whisker ... it still doesn't look very firm, but suggests it's not likely to resume its downward trend," said one trader from a foreign brokerage.
On Tuesday, the IPC snapped five consecutive sessions of losses.
Traders said Wednesday that comments by U.S. Federal Reserve Chairman Alan Greenspan did not help much to get a clearer picture about the future of interest rates.
At a Senate Banking Committee hearing on his renomination, the Fed chief said there were no signs yet of a cresting in U.S. productivity and that it was hard to forecast what would happen to productivity in the long term. He also said the Fed was concerned about a sharp rise in margin debt, or money borrowed from brokers to purchase stocks, in the last two months of 1999.
On the broad Mexican market, some 86.87 million shares were exchanged. Of 85 active issues, 28 rose, 43 fell and 14 were unchanged.
Turnover was 1.744 billion pesos, or $183.31 million.
"Telmex ended up and that brought the market back," one trader said.
Market driver Telmex (TMX) firmed 0.70 peso to 53.50 pesos per L share. The ADRs rose 2-5/16 to 112-7/16.
The firm was backed by an early ABN Amro upgrade too, traders said. Amro raised its fourth-quarter earnings per share estimate to $1.69 from $1.59.
The market is widely anticipating very good results for the telephone group.
Home builder Consorcio Hogar was in the limelight Wednesday on market talk the firm was likely to unveil a security plan of pending housing projects in the next couple of weeks.
The firm's rise was also driven by speculation Mexico's largest construction company, Empresas ICA was interested in buying Hogar.
But Hogar denied the ICA versions in a news release shortly before market close, saying it had not, "entered into any negotiation with ICA."
Hogar closed up 0.35 pesos, or 7.07 percent, at 5.30 pesos per B share.
Elsewhere in Latin America
Argentine shares ended up more than 3 percent Wednesday as banks snapped up new shares in the holding company that controls energy firm Perez Companc, traders said. The MerVal index of most heavily traded shares closed 3.26 percent higher at 581.90 points on moderately high turnover of $26.4 million, up from Tuesday's $19.6 million and Monday's $23.4 million. Gains nearly doubled declines 25 to 14 with 12 issues unchanged.
Venezuelan stocks closed down for a second straight session Wednesday, losing 0.6 percent amid concerns over the government's economic policy. President Hugo Chavez said Tuesday he would reveal on Feb. 2, his first anniversary in office, fresh measures to reactivate Venezuela's battered economy, which shrank 7.2 percent last year. With no news to support buying interest in the Caracas market, its IBC index slipped 32.69 points to close at 5340.20 points. Of those stocks traded, 17 closed stable, 10 fell and only three rose.
Toronto stocks close higher
Toronto's main stock index closed higher Wednesday on strength in the banking group and utilities, the sector in which telecom giant BCE Inc. resides.
BCE said after the market close Wednesday it would spin off most of its stake in Nortel Networks Corp.
BCE and Nortel, which account for 27 percent of the index, were both halted in late afternoon trading before the announcement.
BCE, Canada's largest telecommunications group, said it was spinning off a 37 percent stake of Nortel to shareholders and would retain a 2 percent stake in the big telecom equipment maker.
The TSE 300 composite index closed 77.09 points, or 0.91 percent, higher at 8582.57 on volume of 171.4 million shares worth C$3.74 billion. But the overall market was mixed as decliners edged advancers 571 to 546 with another 310 unchanged.
The TSE's blue chip index, the S&P/TSE 60, was up 6.85 points, or 1.38 percent, at 504.39.
The market had been bolstered much of the day by heavyweight BCE, which hit a new high of C$147.00 before being halted at at C$142.45, a gain of C$6.55. Nortel also hit a new high of C$154.80 but was at C$143.45, down C$2.55 when trading was halted.
"The 77 points of up in the Toronto market were basically due to the Nortel-(BCE) situation and the banks. There's a mixed bag on the high techs," said Rolie Bradley, an institutional salesman at Maison Placements Canada Inc. "This BCE thing's going to have a really positive effect on the market, we'll be going up tomorrow."
Under the proposal, Nortel's shareholders will receive one common share in a new publicly traded company that will operate as Nortel in exchange for each Nortel common share they now hold. BCE shareholders will retain their BCE shares and receive about 0.78 of a common share, subject to adjustment, in the new company for each BCE common share held.
Overall, 10 of the TSE 300's 14 subindexes closed higher Wednesday, led by utilities, which were up 3.72 percent, and a 3.88-percent hike in financial services.
In that sector, Royal Bank of Canada gained C$2.35 to end at C$58.75, Canadian Imperial Bank of Commerce was up C$2.15 to C$35.20 and Toronto-Dominion Bank rose C$1.90 to C$36.50.
Also closing higher were conglomerates, up 2.62 percent, paper and forestry products, up 2.44 percent, and pipelines, up 2.17 percent.
In New York, the Dow Jones industrial average was up 3.1 points, or 0.03 percent, to end at 11,032.99, led by strong financial services stocks. The technology-laced Nasdaq Composite Index fell 97.50 points, or 2.34 percent, to 4,069.91. 
- from staff and wire reports
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