Brazilian stocks recovered from early profit-taking to end firmer on Friday, as foreign buyers returned to the market, but the country's currency ceded ground as the Central Bank bought dollars.
The Sao Paulo Stock Exchange's benchmark Bovespa index recovered early losses to close 0.8 percent higher at 23,154.5 and end a three-day losing streak.
The index, which rallied 97 percent in 2003, has gained 4 percent this year. "It recovered ahead of the options expiry and the market showed that there isn't much selling left at these levels," said Thomas Taterka, an equities trader at Concordia brokerage, adding that he saw buying from foreign investors.
The real ended at 2.829 per dollar, down from Thursday's close of 2.815, as dollar buying by the monetary authority to improve Brazil's reserves countered inflows from corporate debt issues abroad.
Traders said the market was quiet ahead of the market holiday in the United States on Monday.
Bovespa gainers beat losers by 28 to 24, with two stocks ending steady ahead of Monday's stock options expiry.
But trading volume was lower than in the past few sessions.
Telephone company Tele Norte Leste Participacoes, or Telemar, which accounts for about 14 percent of the index, gained 1.1 percent to 47.25 reais.
Telephone operator Embratel, put up for sale by parent company MCI, stood out with a 3.4 percent gain to 9.15 reais.
Telemar, Brasil Telecom Participacoes and Spain's Telefonica have made a preliminary joint bid for Embratel assets. Telefonos de Mexico and the pension fund of Embratel have also said they are interested in an acquisition.
Traders said they expected the Central Bank to cut interest rates again next Wednesday after its first monthly monetary policy meeting of the year.
The bank has cut rates by 10 percentage points since last June, which has helped boost investors' confidence that Latin America's biggest economy will get a head of steam this year.
A Reuters poll of 20 economists released on Friday showed 15 of them expected the bank's Monetary Policy Committee, or Copom, to ease rates by half a percentage point to 16 percent. Of the remainder, four bet on a 0.75 percentage point reduction and one forecast a full percentage point cut.
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