LATIN AMERICAN MARKETS: Brazil, Mexico Track Advances On Wall Street

By Carla Mozee

Most major Latin American equity markets rose Tuesday afternoon, tracking acceleration in gains on Wall Street after the head of the U.S. central bank said the country's recession has "very likely" reached its end.

In Brazil, the Bovespa index climbed 0.7% to 59,284.

Investors assessed a report showing a rise in Brazilian retail sales in July.

"The consumer was the main driver of growth," and a solid consumer environment has been "underscored by a quite resilient labor market and months of job creation," said Alvise Marino, an emerging markets analyst at IDEAglobal, about the retail sales figures.

Consumer-related and finance stocks paced gains in Sao Paulo, with shares of department-stores operator Lojas Renner and home builder Gafisa (GFA) each up 2.2% and banking firm Itau Unibanco (ITUB) up 1.4%.

Also, shares of Petrobras (PBR) rose 0.8% after the company announced a new oil discovery in the pre-salt area of the Santos Basin.

In Mexico, the IPC strengthened by 0.7%, wiping out the previous session's loss of 0.2%. The market had started the session lower although Mexico's largest trading partner, the U.S., said retail sales in August posted their biggest increase in more than three years. Sales excluding automobiles were also better than had been expected.

Banking stocks and shares of steel tubes maker Tenaris (TS) led Argentina's Merval index higher by 0.4%. But Chile's IPSA underperformed the region with its loss of 0.2%.

Equity benchmarks on Wall Street had struggled at the start of a speech by U.S. Federal Reserve Chairman Ben Bernanke, but stocks managed to find higher ground after Bernanke said the recession, from a technical standpoint, is "likely over." He also said there's no longer widespread fear of a financial collapse and economic activity is leveling out.

But "it's still going to feel like a very weak economy for some time," the Fed chief said at a conference at the Brookings Institute.

The Dow Jones Industrial Average (DJI) rose 0.5%, or 48 points, and the S&P 500 Index (SPX) rose 0.3%.

Retail sales rise in Brazil

Shares of grocer Companhia Brasileira de Distribuicao (CBD) picked up 0.3% and discount retailer Lojas Americanas rose 0.2%. But shares of online retailer B2W Companhia Global do Varejo shed 0.7%.

The moves came after Brazil's census bureau said retail sales in July rose 0.5% from June, boosted by supermarket sales. The consensus estimate was for a rise 0.9% on a monthly basis, according to UBS Pactual.

Retail sales have risen for three straight months in Brazil, and consumers have aided the climb by Latin America's largest economy out of recession during the second quarter. Last week, officials said gross domestic product rose 1.9% in the second quarter.

"What we are seeing right now in the U.S., for example, is mostly restocking of inventories as the main driver of growth," he said. "In Brazil, we are seeing actual consumer demand and that's quite unique," compared with many other countries that have been grappling with recession.

Brazilian economic activity had recorded two consecutive quarters of contraction starting in the fourth quarter of 2008.

In other trading action, shares of Net Servicos de Comunicacao (NETCD) fell 1%, remaining in the red after Moody's Investors Service upgraded its corporate family ratings on the cable services and Internet access provider, including a raise to Ba1 from Ba2 on the global scale.

The upgrade was based, in part, by the company's strong subscriber-based growth with no material increase in subscriber churn or delinquency through Brazil's economic downturn, Soummo Mukherjee, Moody's VP senior analyst, said in a statement.

In Mexico City, manufacturing and industrial stocks were the strongest advancers, with engineering and construction firm Empresas ICA (ICA) up 4.2%, mining concern Penoles higher by 4.8% and cement maker Cemex (CX) up 2.6%.