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Brazil, Mexico stocks retreat
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March 26, 1999: 4:54 p.m. ET
Profit consolidation and mixed Dow send bolsas lower, with a few exceptions
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NEW YORK (CNNfn) - Bargain hunters and profit seekers made their presence felt on many Latin American bolsas Friday, as did the influence of a drifting Dow.
In Brazil, shares on the Bovespa blue-chip index, which closed at an eight-month high on Thursday, retreated somewhat, to close down 72 points, or 0.66 percent, at 10,865.
The market's mood continued to be relatively upbeat due to brightening prospects about the beleaguered economy. Investor optimism was buoyed by an apparent slowing in inflation and anticipation of further interest rate cuts as a result.
The Fipe consumer price index for the four weeks ending March 23 showed a rise of 0.8 percent in inflation, less than the 0.96 percent rise a week earlier. On Thursday, the Central Bank cut the benchmark Selic overnight rate, which sets the yield on more than half of the government's domestic debt, from 45 percent to 41.99 percent.
Brazil's currency, the real, ended 0.85 percent firmer at 1.775 per dollar Friday on the back of strong dollar inflows, traders said.
The free-floating currency, however, was still 31.8 percent weaker than when the government first shifted its rigid foreign exchange policy in mid-January.
Mexican shares took the biggest hit in the region, as investors tracked the downward momentum on the Dow and many sought to consolidate gains.
The key IPC index fell 92.62 points, or 1.92 percent, to close at 4,736.58.
In Venezuela, where the bolsa has steered a course independent of regional trends, stocks pared midday gains of more than 2 percent to end the day up 7.6 points, or 0.2 percent, at 3,832.24.
In related news, the country's planning minister, Jorge Giordani, said Friday Venezuela had slashed its 1999 government budget by $1.547 billion, or 7.6 percent, to allow for lower than expected prices for principal export earner oil.
"The cut is about 1.54 percent of gross domestic product," Giordani told reporters. "Now isn't that fiscal austerity?"
The cut, however, was less than the 10 percent cut promised by President Hugo Chavez. When asked to explain the discrepancy, Giordani said the government had said the spending reduction would be around 10 percent.
Investors anxiously had been awaiting a speech Thursday night by President Chavez in which he outlined his economic policy. He painted a very bleak picture of Venezuela's economic and social situation, noting that gross domestic product in 1998 was 20 percent less than in 1978 and per capita income dropped 9 percent in the last five years.
Chavez, who took office on Feb. 2 on a populist platform, said he hoped "to have zero economic growth this year ... to stop the drop would be a success ... and reach 2.0 percent growth in the year 2000."
He also said Venezuela hopes to slash its international debt payments by the equivalent of 1.5 percent of GDP (about $1.5 billion) this year by restructuring and refinancing upcoming payments.
Elsewhere in the region, the bolsas' performances were mixed. Stocks on the Merval index in Argentina dropped 1.31 percent to 406.88, while those on Chile's IGPA index climbed 0.53 percent to 4,063.7. Peruvian shares ended the day nearly unchanged, down 0.09 percent at 1,463.46. And in Colombia, equities slipped 0.34 percent to 924.35. 
-- from staff and wire reports
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