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Latin Day Ahead: Lula Says Brazil Has Room for More Rate Cuts

Brazilian President Luiz Inacio Lula da Silva said the central bank has room to make further rate cuts; Petroleos Mexicanos needs oil to average above $70 a barrel to sustain record spending, the country’s Energy Minister said; Banco do Brasil SA’s profit rose 43 percent in the second quarter; Cia. de Bebidas das Americas said second-quarter profit rose 34 percent; Chile’s central bank will probably keep its benchmark rate unchanged today.

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Lula Says Brazil’s Central Bank Has Room for More Rate Cuts

Brazilian President Luiz Inacio Lula da Silva said the central bank has room to make further cuts in its overnight lending rate.

Pemex Needs Oil at $70/Barrel to Sustain Projects, Kessel Says

State-owned Petroleos Mexicanos needs oil to average above $70 a barrel to sustain record spending of $19.5 billion as it focuses on developing deep sea wells, Energy Minister Georgina Kessel said.

Banco do Brasil Profit Rises 43% to 2.35 Billion Reais

Banco do Brasil SA, Latin America’s biggest federally controlled bank, said second-quarter profit rose 43 percent after a one-time gain from the sale of its stake in a credit- card company and as lending expanded.

AmBev Net Income Rises 34% on Higher Brazil Market Share

Cia. de Bebidas das Americas, Latin America’s biggest brewer, said second-quarter profit rose 34 percent after price increases and new packaging helped increase its share of the Brazilian beer market.

Chile’s Bank May Keep Rate at 0.5% After Seven Consecutive Cuts

Chile’s central bank will probably keep its benchmark rate unchanged today for the first time this year, fulfilling a pledge to hold borrowing costs at a record low to pull the economy out of its deepest slump in a decade.

MAIN COMPANIES:

Brazil

Centrais Eletricas Brasileiras SA (ELET6) (ELET3 BS): Latin America’s largest utility lost an appeal to overturn a ruling ordering the company to pay 1.3 billion reais ($707 million) in compensation to industrial customers, Eletrobras lawyer Igor Santiago said today in an interview in Brasilia. Eletrobras fell 2.4 percent to 27.70 reais.

Cia. Energetica de Sao Paulo (CESP6 BS): Brazil’s third- largest electricity generator posted a record quarterly profit after a currency rally lowered financial costs. Second-quarter profit rose sevenfold to 714.4 million reais, or 2.18 reais a share, from 97.6 million reais, or 30 centavos, in the year- earlier period, Cesp said in an e-mailed statement. Cesp rose 1.3 percent to 19.86 reais.

PDG Realty SA Empreendimentos e Participacoes (PDGR3 BS): The board of the Rio de Janeiro-based homebuilder approved a 2- for-1 stock split and the issuance of 300 million reais in non- convertible local bonds, according to a regulatory filing. PDG rose 1.1 percent to 27.24 reais.

Ultrapar Participacoes SA (UGPA3) (UGPA4 BS): The Brazilian fuels and petrochemicals group said second-quarter profit fell to 93 million reais from 110 million reais a year earlier. Ultrapar rose 1.4 percent to 64.88 reais.

Chile

Vina Concha y Toro SA (CONCHA CC): Chile’s biggest winemaker reported an 11 percent increase in second-quarter profit. Net income rose to 13 billion pesos ($24 million) from 11.7 billion pesos a year earlier, the company said in a statement distributed by PRNewswire after markets closed yesterday. Concha y Toro slid 0.9 percent to 1,160 pesos.

Colombia

Bancolombia SA (BCOLO) : Colombia’s largest lender reported unconsolidated profit of 64.1 billion pesos ($32.4 million) for July. Net income fell from 76 billion pesos in June, the Medellin-based bank said in a filing with the financial regulator. Bancolombia rose 1.3 percent to 17,100 pesos.

LATIN AMERICAN MARKETS:

Brazil: Retail sales rose 6 percent in June from the same month a year earlier, after increasing 4 percent the previous month, according to the median estimate of 29 economists in a Bloomberg News survey. The national statistics agency is slated to release its monthly report at 8 a.m. New York time.

The real gained 0.8 percent to 1.835 per dollar.

The yield on the zero-coupon, real-denominated bond due in January 2010 fell two basis points, or 0.02 percentage point, to 8.7 percent, according to Bloomberg prices.

Chile: The central bank will leave the overnight lending rate unchanged at 0.5 percent, according to 15 of 16 economists surveyed by Bloomberg. One analyst predicts policy makers will lower the key rate to 0.25 percent.

The peso gained 0.3 percent to 546.12 per dollar.

The yield for a basket of Chile’s 10-year peso bonds in inflation-linked currency units, called unidades de fomento, rose one basis point to 2.94 percent, according to Bloomberg composite prices.

Other prices in Latin American markets:

Argentina: The peso weakened 0.1 percent to 3.8323 per dollar.

The yield on the country’s inflation-linked peso bonds due in December 2033 fell 28 basis points to 13.06 percent, according to Citigroup Inc.’s local unit.

Colombia: The peso jumped 1.5 percent to 2,014.42 per dollar.

The yield on Colombia’s benchmark 11 percent bonds due July 2020 fell four basis points to 9.09 percent, according to Colombia’s stock exchange.

Mexico: The peso advanced 0.6 percent to 12.9445 per dollar.

The yield on Mexico’s 10 percent bond due December 2024 rose eight basis points to 8.5 percent, according to Banco Santander SA.

Peru: The sol rose 0.6 percent to 2.929 per dollar.

The yield on Peru’s 8.6 percent bond maturing August 2017 was little changed at 5.34 percent, according to Citigroup Inc.’s unit in Lima.

ECONOMIES: Brazil will post June retail sales; Argentina will publish consumer confidence; Chile will release its nominal overnight rate target.

To contact the reporter on this story: Laura Price in London at lprice3@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos in New York at papadopoulos@bloomberg.net

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