By Carla Mozee
LOS ANGELES (MarketWatch) --Brazilian shares slipped Friday,
with pressure on mining giant Companhia Vale do Rio Doce following
its plans for a $1.6 billion assets purchase, while Mexican shares
broke through losses that followed a report that U.S. economic
activity shrank to its lowest levels since the 1980's.
Brazil's Bovespa index fell 0.9% to 39,300.79.
In Sao Paulo, shares of market heavyweight Vale (RIO) fell 1.7%
after Rio Tinto (RTP) said late Thursday it would sell to Vale the
assets of two potash projects for $850 million and an iron ore mine
in Brazil for $750 million in an all-cash deal.
Vale is the world's largest producer of iron ore, a key
component for the production of steel.
The company "has appeared to pay a healthy premium, despite Rio
Tinto's pressure to de-lever, and we note Vale's debt will continue
to rise given aggressive dividends, capex and (now) acquisitions
planned for 2009," wrote metals and mining analysts at Deutsche
Bank in a note Friday.
The broker maintained its hold rating on Vale and its price
target of $12 for the miner's U.S.-listed shares. Vale's New York
Stock Exchange-listed shares closed down 2.2% at $14.11.
Shares of other steel makers closed lower. Gerdau (GGB) lost
1.1%, Usiminas fell 1.2% and CSN (SID) declined 2.6%.
Shares of Brazil's other market heavyweight, Petroleo Brasileiro
(PBR) picked up 1.2% as crude-oil prices edged up 0.6% to $41.48.
Oil futures benefited after the U.S. government said economic
activity in the fourth quarter contracted less than had been
expected by analysts.
Fourth-quarter gross domestic product shrank at an annualized
rate of 3.8%, the worst quarterly decline since 1982. Economists
had expected a decline of 5.5%.
But the GDP figure would have been worse if the government
hadn't counted an unwanted buildup of goods on store shelves as
growth, said the Commerce Department. Excluding the inventory
buildup adjusted GDP contracted 5.1%.
Mexican equities had started out the session in the red
following the gloomy economic report from its biggest trading
partner, but they were able to fight their way out of negative
territory and pull the IPC index up 0.1% to 19,565.14.
Shares in the manufacturing, home building, consumer products
and airline sectors all posted gains.
Steel maker Grupo Simec paced overall advancers with a rise of
6.3%, while decliners are led by engineering firm Ideal.
Cemex (CX) shares finished down 1.3% after the cement maker late
Thursday posted a fourth-quarter net loss of $707 million on a 23%
sales decline to $4.5 billion. Analysts polled by Dow Jones
Newswires had expected a net loss of $242 million.
The company also cut is 2009 capital expenditure plan to about
$650 million, a move that the company expects will allow it to save
$700 million, up from a previous estimate for cost savings of $500
million.
Shares of America Movil (AMX), the most heavily weighted on the
IPC, finished up 0.9%. The wireless services provider's latest
quarterly results are due for release Feb. 5.
Chile's IPSA index lost 0.6% to 2,549.46 on Friday and
Argentina's Merval lost 1% to 1,074.82.
For the week, the Bovespa rose 3.1%. It posted a 4.7% gain for
January, its second consecutive monthly advance.
The IPC finished 1.1% higher for the week. However, the index
stumbled 12.6% in January, its biggest monthly loss since October.
The monthly decline also marked the worst yearly start for the IPC
since 1998, when the index also lost 12.6% in January.
The Merval ended the week with a gain of 1%, and finished 0.2%
for January.
The IPSA logged a weekly gain of 2.2%, but outpaced its regional
rivals for the month by jumping 7.3%.
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