Brazil stocks rebound; currency down on Greece woes

Brazilian stocks recovered from an early slide to finish slightly higher on Thursday as U.S. markets shrugged off worries over Greece and rose on news of strong quarterly earnings.

Brazil’s currency, the real, fell 0.68 percent to trade at 1.765 per dollar as the greenback rose against a basket of currencies and the euro fell on deepening concern over Greece.

European Union authorities on Thursday reported Greece’s 2009 budget deficit was far larger than expected and the data may be revised again. The news fanned global concerns about Greece’s ability to avoid default and risks facing other debt-choked European countries.

However, a stream of solid results from U.S. consumer bellwethers in the United States and a fall in jobless claims helped stocks there stage a late comeback, lifting market sentiment in Sao Paulo.

“Expectations for company results and economic data from the United States alleviated the pressure of this morning,” said Fernando Barbara, a fixed-income director at Capital Investimentos.

The benchmark Bovespa stock index .BVSP ended up 0.1 percent at 69,386.41 points after falling more than 1 percent in early trade.

The Bovespa this month soared to near a 22-month high on growing appetite for emerging market securities and signs of global economic recovery. The IMF on Thursday warned that huge capital inflows into emerging markets were raising the risk of asset bubbles.

State-run oil company Petrobras (PETR4.SA) shares were down 1.28 percent to 33.86 reais, tracking a decline in U.S. oil prices sparked by an unexpected rise in U.S. crude inventories.

Shares of miner Vale (VALE5.SA), the world’s largest producer of iron ore, gained 0.57 percent to 49.69 reais. Local media reported on Thursday the company had completed iron ore contracts with all of its clients.

Petrobras and Vale are the two heaviest weighted stocks in the index.

Yields on Brazilian interest rate futures on shorter-term contracts were broadly down ahead of a key decision on borrowing costs from the central bank next week.

The yield on the contract due June 2010 DIJM0 slipped 0.05 percent to 9.130 percent. The yield on the contract due July 2010 DIJN0 fell to 9.387 percent from 9.402 percent.

Central bank policy makers meet on April 27 and 28 to consider changes to the country’s benchmark interest rate, the Selic, currently at 8.75 percent.

Analysts expect a rate hike, but are divided over whether the Selic will rise by 50 basis points or 75 basis points.