Latin American stock markets roundup

NEW YORK, March 9 (UPI) -- Latin American stocks were mixed this week, as higher oil prices hurt some markets while failing to halt the momentum of others.

Despite some losses from profit-taking, Brazil remains a top investment choice among emerging markets, a JP Morgan official said Wednesday.

"Is the party over? I don't thing so, but it might be interrupted," said Stuart Schweitzer, the bank's managing director and global markets strategist.

Schweitzer's comments come as signs emerge that Brazil's economy is slowing. Additionally, interest rates are likely to keep rising as inflation dangers remain.

An increase in U.S. interest rates will also start to hurt emerging market economies, but Schweitzer said that Brazil is likely to still come out ahead, largely because of the government's orthodox economic policies.

Schweitzer also gave some political cover to central bank authorities, as he voiced support for Brazil's consecutive hikes in the interest rate, which now stands at 18.75 percent.

Government officials have come under fire from local businessmen, who say the high rates make credit - needed for investments - impossibly expensive.

But Schweitzer said those are simply the tough tactics that the Brazilian economy has to go through if long-term growth is to be seen.

Industrial production numbers released Wednesday didn't paint a pretty picture for the short-term effect of the rate hikes, however.

Production in January expanded at its slowest pace in three months, as businesses cut output as they had little cash needed to expand. Output rose 6 percent as compared to the same month a year earlier. That after expanding 8.3 percent in December and 8.1 percent in November.

That is especially worrying for Brazil, where industrial output serves as the engine behind economic growth. In addition to high interest rates, analysts say an appreciating local currency is cutting into profits for exporters.

For the week, Brazil's Bovespa stock index gained 314 points to end Wednesday at 28,514.

Argentina and the International Monetary Fund have agreed to open talks soon, after months of no contact and a halt in IMF loan payments to the country as it sorted out its debt restructuring.

Economy Minister Roberto Lavagna was in Washington this week to make the rounds and report on how the country's debt swap went. Lavagna said that in the end, Argentina offered some $41 billion in new debt to replace the more than $100 billion it defaulted on in December 2001. That amounts to about 30 cents on the dollar for investors who agreed to the debt swap.

While not commenting on the swap specifically, IMF officials said that talks with Argentina were going well.

"It was agreed that the next stage in the dialogue will be to hold technical-level meetings in Washington in the coming weeks," the IMF said in a statement.

While in Washington, Lavagna also met with U.S. Treasury Secretary John Snow.

It was late last week that Argentina said 76 percent of creditors had agreed to the debt swap. Argentina has said it will make no other alternative debt offers. It was widely thought that at least 70 percent of investors had to sign up for maneuver if the deal was to be considered a success, though the IMF has never officially said what percentage would be acceptable.

The percentage of takers appears good enough for Argentina to optimistically look forward to the continuation of its loan payments from the IMF. But the Fund is still likely to urge Argentina to address the debt holders who didn't agree to the swap.

Argentina's Merval stock index lost 52 points to end at 1,530.

Mexico's inflation rose 0.33 percent in February, above the market forecast but still an acceptable amount to the government as it keeps prices in line with the central bank's target.

That brought the year-to-date inflation down to 4.27 percent, a nice drop from the 4.54 percent seen at the end of January. Central bank officials are confident that this year's inflation will come within its target range of 2 percent to 4 percent.

February's reading was also much improved from the same month last year, which saw an increase of 0.6 percent. The government said prices for housing and food rose in February, while those for electricity fell.

Mexico's IPC stock index lost 99 points to end at 13,671.

Chile's tax on mining companies looks to be toughened, after the government and opposition lawmakers in control of the lower house agreed to changes.

Chile - the world's leading copper exporter and a country rich in other mineral resources - has faced opposition from big mining companies who don't want to see the tax plan pass.

The biggest change to the tax - as agreed upon by the government and the mining committee in the lower house - is that it will be expanded to less-profitable companies. While the agreement reached Wednesday seems to assure passage in the lower house, the bill will still face stiff resistance in the Senate, where right-wing lawmakers have vowed to kill it.

Mining Minister Alfonso Dulanto told reporters that the government is working closely with opposition lawmakers to produce a bill that is acceptable to all. He also said that the government didn't want to "endanger the (mining) industry's ability to compete internationally."

Mining companies last year saw lucrative profits as copper prices were high. Those profits - and a well known history of tax loopholes for the companies - made reforming the tax popular among the average Chilean. Last year, copper exports made up 45 percent of the country's total goods sent abroad.

For the week, Chile's IPSA stock index added 17 points to close at 1,934.

Venezuelan officials kept up the tough words for their American counterparts this week. After weeks that have seen President Hugo Chavez accuse the Bush administration of plotting to have him assassinated, the country is now tossing economic stones.

Rafael Ramirez, the oil minister, told reporters this week that the country would have no problem finding buyers for its oil if it cut off supplies to the United States in response to aggressive acts.

Chavez has repeatedly stated that if he is killed - not just by anyone, but by an American assassin, mind you - oil sales to the United States will halt.

Venezuela is the world's No. 5 exporter of oil. The United States receives about 10 percent of its oil from Venezuela.

"There is a hungry market for oil. We have demand that doesn't stop in big consumers like India and China," Ramirez said.

The U.S. government has denied it has plans to kill Chavez.

William Brownfield, the U.S. ambassador to Venezuela, said this week that should the country halt its sales, the United States would simply increase its purchases from other suppliers.

For the week, Venezuela's IBC stock index added 105 points to close at 30,756.

Colombia will receive a $400 million loan from the Andean Development Corp., the Venezuela-based financing arm of the Andean Community. The money will be used for an electricity project and to help the country become more competitive in a free trade scenario. To help its trade stance, the Colombian government will use the money to improve ports, modernize the banking system and improve the energy and telecommunications sectors.

Colombia's IGBC stock index gained 396 points to close at 5,505.