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Bovespa extends streak
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January 6, 1999: 5:23 p.m. ET
Austerity program's progress pushes Brazilian shares 3 percent higher
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NEW YORK (CNNfn) - Brazilian stocks surged Wednesday, kicked higher by good news from the political sphere and hefty advances in overseas markets, but other Latin American exchanges saw mixed results.
Brazil's blue-chip Bovespa index climbed 220 points, 3.09 percent, to 7,331 after the upper congressional house approved a new, higher version of the CPMF financial transactions tax and the bill now faces a second vote in the Senate later in the month.
The controversial bill will now be submitted to the lower house.
The measure is part of the $84 billion anti-crisis austerity plan that the government has promised in order to win financial aid from the international community.
Meanwhile, investors also cheered stock rises in major European bourses on Wednesday, especially in Lisbon, where prices jumped 3.8 percent.
On Wall Street, the Dow Jones industrial index was up 2.5 percent when the Brazilian market closed.
Volume in Brazil was a mere $300 million, however, as investors slowly returned from their holidays.
Among blue-chip gainers, fixed line telephone firm Tele Norte Leste preferred rose 8.28 percent to 17.39 reais, while Petrobras preferred climbed 3.28 percent to 142.50 reais and Eletrobras preferred rose 4.89 percent to 23.60 reais.
Mexican stocks continued their downward drift amid concerns over the impact of a tight budget, economic slowdown and pending tax reform on company earnings.
"Clearly there is a divergence between what the fixed-income people seem to be thinking and what the equity people are thinking," said Lars Schonander, head of research at Santander Investment in Mexico.
The leading IPC share index ended off 14.72 points, 0.39 percent, at 3,745.15.
The IPC earlier rose as high as 3,801.70 amid short-lived buying prompted by a firm peso, a drop in domestic interest rates and record gains on Wall Street.
Dealers noted that the most heavily traded sliders included consumption-related stocks from the IPC line-up, like retailer Cifra, down 0.10 pesos to 10.70 pesos, and beverage firm Femsa, off 0.55 pesos at 25.10 pesos.
Volume was a lackluster 73.8 million shares.
The Venezuelan stock market closed slightly lower for the third straight day in apathetic trading as investors waited to see the economic policies of president-elect Hugo Chavez.
The IBC fell a mere 0.2 percent, or 10 points, to close at 4,620 with 10 stocks stable, six falling and only four rising.
The volume traded was 676 million bolivars ($1.2 million), compared with 476 million bolivars ($843,280) Tuesday.
"There was nothing of interest," lamented Hector Perez of Inverunion, noting that investors were either enjoying the holiday break or waiting for a concrete statement from Chavez.
"There is a great deal of uncertainty in economic terms with the new government, which has not given out any concrete information in that respect."
Smaller Latin markets followed Brazil's euphoria, led by Peruvian stocks' gains of 22.64 points, 1.70 percent, at 1,353.10. Chilean shares continued on their more sober course, only lifting 7.04 points, 0.20 percent, to 3,615.51.
Argentine stocks also rallied, with the oil sector continuing to lead an advance that started at the beginning of the week.
The MerVal index of most-traded shares ended 6.27 points higher, gaining 1.43 percent to 444.10 after climbing 1.03 percent on Tuesday.
Wednesday's gains were led by former state oil company YPF, which surged after the government set late Tuesday a base price of 38 pesos per share for the sale of its remaining stake in the now-privatized firm.
-- from staff and wire reports
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