(Updates to close)
SAO PAULO, Brazil, March 12 (Reuters) - Brazil's stock
market edged lower on Wednesday and the currency gained as
investors cast aside concerns of possible government measures
to stop the hard-charging real's rally.
The Bovespa index <.BVSP> of the Sao Paulo Stock Exchange
fell 0.31 percent to 62,176.58 points, after surging 3.95
percent the previous session.
Shares in local banks including Itau, Unibanco and Banco do
Brasil declined after strong economic growth numbers released
on Wednesday raised expectations the central bank may have to
raise interest rates to slow the economy and keep prices at
bay.
Brazil's currency, the real <BRBY><BRL=>, strengthened 0.59
percent to 1.674 per dollar. The currency has gained about 6.2
percent in 2008 and is trading near its strongest levels since
May 1999 as overseas investors pour dollars into the country to
benefit from high local interest rates.
The government may announce later on Wednesday foreign
exchange measures to slow gains in the real, but traders expect
they will have a limited impact.
"One of the main contributors for the real's strength is
the huge interest rate differential here," said Miriam Tavares,
foreign exchange director at the AGK brokerage.
Interest-rate futures <0#DIJ:> on the BM&F commodities and
futures exchange in Sao Paulo ended mostly higher after data
released on Wednesday showed Brazil's economy expanded in 2007
at the fastest pace in three years. The expansion raised
concerns the central bank may have to raise domestic borrowing
costs to keep prices in check and cool the economy.
At the stock market, Itau <ITAU4.SA>, Brazil's
second-largest private sector bank, fell 3.47 percent to 41.41
reais, while Unibanco <UBBR11.SA> lost 2.48 percent to 21.65
reais on concerns higher local rates may dampen credit demand
and increase loan defaults.
Other banks also fell with Banco do Brasil <BBAS3.SA>
dropping 3.08 percent to 25.77 reais, and Bradesco <BBDC4.SA>
losing 1.24 percent to 51.9 reais.
(Reporting by Elzio Barreto and Silvio Cascione; Editing by
Leslie Adler)
(([email protected]; +55-11-5644-7725; Reuters
Messaging: [email protected]))
Keywords: MARKETS BRAZIL