Latin American markets were generally higher, as Brazil shot up after yesterday's market holiday and despite ongoing corruption investigations and lingering worries about interest rates.
Argentina also gained ground, but Mexico slipped amid modest strength on Wall Street. Volumes dried up ahead of the market holiday in the U.S. on Monday.
Brazil's benchmark Bovespa Index jumped 777.06 points, or 3.17%, while Mexico's benchmark Bolsa Index shed 21.25 points, or 0.16%. Argentina's Merval Index rose 13.66 points, or 0.94%.
Brazilian stocks rallied today, surging after yesterday's public holiday as the market played catch up following the U.S.-led advance. Still, trading activity was largely thin in the wake of the holiday yesterday and ahead of the U.S. holiday on Monday.
In the news, the Brazilian central bank released the notes from its last monetary policy meeting in which it raised the key Selic rate to 19.75%.
The bank said that near-term inflation targets are still under threat even though targets remain safe beyond the 12-month horizon.
Officials also left open the possibility of higher rates down the road, even amid expectations that inflationary pressures will begin to subside.
Also, traders are worried about the ongoing corruption investigations that are gripping the administration.
President Luiz Inácio Lula da Silva's government failed to stop Congress from opening an inquiry into allegations of corruption at state-run firms, which could stall progress on economic reforms.
In research, a major brokerage house cut its rating on CVRD to "peer perform" from "outperform," saying that iron ore prices may drop in 2006.
Also, regional steel companies were active after another investment bank said that although the sector has been hit by fears that rising Chinese steel output will hurt prices, China still continues to import more finished steel than it exports.
Turning to Mexico, the market pulled back modestly, amid a quiet session on Wall Street ahead of the long holiday weekend.
In the news, the Bank of Mexico left its monetary policy unchanged, while continuing to link local rates to monetary conditions in the U.S. The move was widely expected as domestic inflationary pressures have begun to wane.
In corporate news, shares of Cintra continued to surge after the company said late yesterday that it will begin accepting offers in June for the airlines it manages.
The state-run company hopes to sell its controlling stakes in AeroMexico and Mexicana. Foreign investors wishing to participate in the sale must align themselves with local investors.
Meanwhile, Cemex said that shareholders taking dividends in the form of stock will receive one new CPO share for every 25.6 held and the new shares will be priced 20% below Thursday's average share price.
Argentine equities rose modestly, as investors continue to await the finalization of the government's US$ 103 billion debt restructuring.
Although the restructuring has the green light to proceed, many investors are waiting to get back into the market after the deal is final and no more delays can emerge. Steel shares were active, following the positive research call on the group.
Thomson Financial Corporate Group - www.thomsonfinancial.com