Brazilian stocks extend winning streak to six

SAN FRANCISCO (MarketWatch) � Brazilian equities finished higher Tuesday, with the benchmark index logging a sixth-straight winning session to close at a more than nine-month high as traders cheered reports of progress in Greece�s struggle to reach a pact on a second rescue package.

Brazil�s Ibovespa BR:BVSP �closed up 693.30 points, or 1.1%, at 65,917.02 � at its highest closing level since April 29, 2011. The index, which bounced back from a loss of as much as 0.7% during the session, has now tallied a six-session gain of 5%.

Click to Play Greek talks resumes amid strike

Prime Minister Papademos and political leaders backing his interim government try again to agree on cutbacks needed to win a new bailout deal.

�Brazil spent much of January in limbo, as investors debated the extent of the slowdown the economy will see in 2012, and attempted to price in risk around exposure to external demand shocks emanating from a possible Greek default or broader slowdown in developed markets and China,� said Clinton Carter, director for Latin America at Frontier Strategy Group.

At the same time, �weak industrial production and manufacturing numbers, combined with rate cuts and inflation expectations, kept the [Brazilian] real relatively weak,� he said. �This environment has created an opportunity for investors, who took a step back and found Brazilian assets to be a good value compared to what else is on offer globally.�

So �money has flowed back in to Brazil, appreciating the real and lifting stocks. As the Ibovespa is heavily weighted towards primary products exporters, however, the market will continue to show sensitivity to developments in Greece and China,� Carter said.

In Greece Tuesday, government officials have reportedly drafted a final document detailing provisions of a second rescue package needed to avert a default. But a meeting between the Greek Prime Minister Lucas Papademos and party leaders supporting his coalition government over a new loan deal has been postponed to Wednesday morning, reports said. Read more on Greece.

On Wall Street, stocks finished higher, with the Dow Jones Industrial Average DJIA �closing up 0.3%. Read more on U.S. stocks.

Among the heavyweights in Sao Paulo, shares of miner Vale SA BR:VALE5 �rose 0.1%, while Petrobras SA BR:PETR4 �added 3%.

Shares of Itau Unibanco BR:ITUB4 �climbed by 0.9%. Brazil�s second-biggest bank by assets on Tuesday reported fourth-quarter profit of 3.68 billion Brazilian reals ($2.13 billion), down from 3.89 billion reals earned a year earlier. Read more on Itau Unibanco�s results.

Separately, the bank offered to pay up to 11.7 billion Brazilian reals to buy out shares in credit-card networking services provider Redecard BR:RDCD3 �it doesn�t already own. Redecard shares climbed 10.5%. Read more on Itau Unibaco bid.

Brazil currency action

In currencies trading, the Brazilian real USDBRL �lost ground against the U.S. dollar, with the greenback buying 1.7228 Brazilian reals, up less than 0.1% from Monday. The dollar had traded as low as 1.7170 Brazilian reals.

Foreign-exchange intervention is �certainly in the air this week for Latin America,� said Win Thin, global head of emerging-markets strategy at Brown Brothers Harriman. Read about strength in Latin American currencies.

�Brazil stands out as the most aggressive, of course, as the central bank intervened in the forward market Friday and in the spot market Monday, signaling clear discomfort with USD/BRL approaching 1.70,� he said in a note, adding that he fully expects stronger foreign-exchange measures if the dollar-real cross threatens that level.

Meanwhile, stock trading in Mexico resumed after Monday�s holiday, with the IPC benchmark MX:IPC down 0.1% at 38,062.42. Regional bank stocks reversed course to finish lower, while homebuilding shares were among the gainers.

Shares of Grupo Financiero Banorte MX:GFNORTEO �slipped by 0.2% and Desarrolladora Homex MX:HOMEX �tacked on 2.8%. Specialty food company Grupo Bimbo MX:BIMBOA �lost 2%.

Also Tuesday in Latin America, Argentina�s Merval AR:MERV �shed 1.3% to 2,769.56 and Chile�s IPSA CL:IPSA �fell 0.3% to 4,362.74.