Brazil stocks end slightly weaker, real firms
SAO PAULO, June 26 (Reuters) - Brazil's stocks seesawed around the unchanged mark on Friday before ending slightly weaker, as declines in the heavyweight natural resource companies offset gains in banking shares, while the currency added to the previous day's gains against the dollar.
Brazil's benchmark Bovespa stock index .BVSP ended down 0.06 percent from Thursday's close at 51,485.6 points. For the week, the index ended near flat.
Brazil's currency, the real (BRBY: Quote, Profile, Research), firmed 0.3 percent to 1.94 per dollar following comments from China's central bank that it saw a need for a super-sovereign reserve currency weakened the dollar. The real had rallied 1.8 percent on Thursday.
The central bank sold $272.5 million in currency swap contracts on Friday, rolling over a similar batch of paper coming due next month. The swaps are linked to short-term interest rates and can help prevent extreme swings in the exchange rate by offsetting inflows to the spot market.
Yields on Brazil's interest rate futures fell sharply Friday after the central bank signaled it will reduce borrowing costs further to stoke a nascent economic recovery as consumer prices remain under control.
Policymakers trimmed their forecast for economic growth in 2009 and reduced their view on inflation for 2010.
The move sent interest rate futures yields lower <0#DIJ:> as investors expect the central bank to take into consideration a "very, very good" scenario for inflation next year when deciding on future monetary policy, said Arthur Carvalho Filho, chief economist at Ativa brokerage.
Brazil's two largest private-sector banks, Itau Unibanco (ITUB4.SA: Quote, Profile, Research) and smaller rival Bradesco (BBDC4.SA: Quote, Profile, Research), rose 1.6 percent to 30.91 reais and 1.1 percent to 28.90 reais, respectively.
Data on bank lending released on Thursday showed a record for default rates on consumer credit, but the head of the central bank's economics research department said defaults rates would fall by year-end because of a recovery in lending in the coming months. Continued...
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