NEW YORK, Oct. 23 (UPI) -- Stocks across Latin America were up this week, as Argentina and Mexico hit high points and Brazil continued its optimistic roll.
As traders enjoyed Wednesday's news from Brazil's central bank of a new interest rate cut, attention also turned to the status of the country's relationship with the International Monetary Fund, as a $30 billion loan deal expires in December.
Brazilian officials -- riding a few months of rebound in their equity, bond and currency markets -- are playing coy with the IMF and investors, publicly weighing the costs and benefits of renewing a loan deal with the multilateral.
Finance Minister Antonio Palocci said this week that Brazil may opt for a "preventive" deal with the IMF, one in which the Fund would make loans available only if Brazil's economic situation warranted it.
There were reports in the Brazilian press this week that Palocci was encountering resistance from American officials in regard to this flexible arrangement with the IMF, but the Brazilian dismissed such worries.
"There is no collision, we don't have any problems with the Americans," Palocci told reporters during a visit to Argentina late last week. "I spoke with the American authorities (at an IMF meeting) in Dubai and they didn't have any problems."
Just how large such a preventive loan package would be has yet to be decided, though the figure of $10 billion has been floated.
Palocci has shot down investor worries that the government of President Luiz Inacio Lula da Silva is too eager to distance itself from the IMF on purely ideological grounds.
For years, the leftist Lula had railed against the IMF and what he called it interventionist policies in Latin America. But he has significantly toned down such talk since becoming president in January.
"Brazil doesn't need new reinforcement (with a loan)" Palocci said. "Our main expectation in relation to an accord isn't new resources. That's why we're talking about a preventive accord."
Investors are following developments with the IMF carefully, as the precariousness of Brazil's debt situation -- while vastly improved from a year ago -- could still send foreign cash stampeding out of the country should any missteps occur on the macroeconomic front.
On trade, Brazil's foreign minister -- visiting India for talks there -- said this week that the developing world is ready to be more flexible after the disastrous World Trade Organization talks in Cancun, Mexico, last month.
"We should move forward, as the WTO and a rule-based multilateral trading system, however imperfect, is in the interest of countries like India and Brazil," said Celso Amorim on Tuesday in New Delhi, according to the Times of India.
Brazil is the most vocal leader of the so-called Group of 21 nations which sparked the breakdown of the talks in Cancun after the United States and Europe refused to budge on the issue of agricultural subsidies.
Since then, though, the United States has signaled that it will aggressively seek bi-lateral trade deals rather than work on a multi-lateral front, and more than one U.S. official has indicated that countries within the Group of 21 will not be looked upon favorably.
That has already sparked an exodus from the group, with Costa Rica, Colombia and Peru backing out of the organization in the past weeks.
Which, perhaps, might explain Brazil's more conciliatory tone of late.
But it was the central bank cutting the country's benchmark interest rate to 19 percent from 20 percent that had investors jumping on Wednesday. It was the fifth rate cut in five months for the bank.
For the week, Brazil's Bovespa stock index gained 293 points to end Wednesday at 18,235.
Argentina's equities had another record week, though profit taking took hold late, as investors were getting into the action as economists forecasted the economy could grow by 8 percent this year.
The country's Merval stock index has tacked on more than 70 percent this year, and about 10 percent in October alone.
On Tuesday, flagship airline Aerolineas Argentinas reported profits of $19.6 million before taxes for the first three quarters of this year. That is compared to an $87.7 million loss for the same period a year earlier.
Company officials said a turnaround in the country's economy as a whole is the biggest factor, as more Argentines are flying again.
The upbeat earnings report comes on the heels of last week's announcement that the company was going to float about 40 percent of its shares on the Buenos Aires exchange. Company officials declined to discuss whether they will offer shares in New York or Madrid in the future.
The Merval ended the week with a 22-point gain at 892.
Latin America's largest wireless company America Movil led Mexican equities up this week, as the company reported strong third-quarter earnings, though the numbers were below traders' expectations.
Net income at the company was nearly $176 million in the quarter, or about seven times larger than the same period in the year previous.
America Movil said its main Mexican presence -- Telcel -- led the way, with the subsidiary tacking on 818,000 new customers in the quarter, adding to Telcel's 80 percent market share of cell phone users in the country.
On Tuesday, Mexican and Japanese officials said that the countries would continue with talks for a bi-lateral trade deal after Japan's Nov. 9 elections for its lower house.
It was last week that Mexican officials were hoping to finalize a deal with Japan, as President Vicente Fox was visiting Tokyo.
But Japan's refusal to move on a 4.3 percent pork imports tariff stalled talks. If the deal does eventually go through, it would be the country's first with a partner that would send a large volume of agricultural products to its shores.
For the week, Mexico's IPC index added 70 points to close at 7,914.
Chilean officials remain optimistic on the country's chances for growth, with recovery in the United States and Asia to be the engine to renewed good times.
Finance Minister Nicolas Eyzaguirre told reporters that on Tuesday, despite the government's recent lowering of expectations for gross domestic product this year and a report on weak economic activity for August.
Eyzaguirre also brushed off thoughts that Chile's peso -- which is at a 27-month high -- is hurting the country's exporters.
While declining to provide details, Eyzaguirre hinted to reporters that there could be a nice surprise in store for the fourth-quarter investment reading.
Addressing talk of a common Latin American currency in the future, Eyzaguirre tried to dampen down expectations as leaders in Brazil and Argentina stoke talk of complete regional integration.
Eyzaguirre pointed out that while there is much talk about integration of late in the region, the fact remains that on the corporate level, the countries of Latin America are a long way from working comfortably with one another.
For the week, the country's IPSA index gained 27 points to close at 1,584.
Venezuelan officials said Wednesday that the state-run oil company PdVSA will spend $43 billion between 2004 and 2009.
Some $29 billion of that will be used for exploration, the company said in a press release. The company hopes to reach a capacity of 5 million barrels a day.
The rest of the money will be used in improving the company's refining network.
PdVSA is still trying to recover fully from a February strike which saw workers joining with other industries across the nation in a bid to knock President Hugo Chavez from power, or at least force a referendum on his rule.
Chavez fired about half of the company's 36,000 workers at the time, which, while making the company leaner, has dented its ability to operate at full capacity.
There is disagreement on exactly how much oil the company is pumping at present, with the government saying September output was 3.3 million barrels per day, while a group of former employees report that output was only 2.6 million barrels a day.
For the week, the IBC index added 692 points, ending at 19,199.
In Colombia, industrial production rose 2.7 percent in the first eight months of the year, according to a survey of industrialists this week, which is lower than analysts were expecting.
The automobile industry was particularly hard hit, as it slipped 19 percent during the period as compared to the same time last year. The political problems in Venezuela were to blame, as Colombia's automobile sector ships many cars to its neighbor.
Colombia's IGBC index added 21 points to close at 2,148.
