Brazilian financial markets recovered some losses on Friday despite a Wall Street slump on weaker-than-expected US jobs data as a government fiscal package to stimulate Latin America's biggest economy.
The jobs data eased fears of aggressive US interest rate hikes, which could take the shine off emerging markets like Brazil, traders said.
The market was also pleased to see the government tax package included a reduction in the tax imposed on profits from stock trading to 20 percent from 25 percent.
"In a way, what helped markets today was the government's fiscal package," said Ademir Carvalho, a trader at Finabank brokerage in Sao Paulo.
The Sao Paulo Stock Exchange's benchmark Bovespa index finished 1.51 percent higher at 21,652 points, while the Dow Jones shed 1.48 percent to close at its lowest level in 2004.
Carvalho added, however, that the Bovespa could not run against the flow of Wall Street indefinitely.
Meanwhile, Brazil's currency, the real, climbed 1.21 percent to close at 3.033 reais against the US dollar after weakening around 0.5 percent in the previous session.
The Bovespa had fallen 3.8 percent on Thursday on the back of reports by news magazines that Central Bank President Henrique Meirelles had evaded taxes.
But traders said investors were less worried about the allegations after Meirelles dismissed the reports and Finance Minister Antonio Palocci backed the central bank chief, saying he is "even stronger now than before."
"The Meirelles issue seems to have been put aside by the market," said Carvalho.
Energy stocks recovered some ground although analysts warned that possible judicial resistance to the government's drive to reform the sector made them a risky investment.
"A very negative scenario would be if the court rules that the laws approved by Congress to establish the new model are not valid," Merrill Lynch analysts said in a research report. "This would potentially delay implementation by a period of 3 to 6 months."
The IEE energy sector index rose 1.82 percent after plunging 5.69 percent a day earlier. Shares of state-owned energy firm Cemig were among the Bovespa's top gainers, rising 5.61 percent to 51.75 reais.
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