Brazil's financial markets gained ground on Friday as traders were heartened by supportive US data and a lack of new shocking developments in a political scandal at home that has spooked investors.
The real firmed to close at 2.907 per dollar from Thursday's close of 2.933 per dollar as traders engaged in the usual end-month tug of war to set the Ptax rate which will be used for a dollar-denominated local debt expiration on Monday.
"There was a cease-fire in the political arena, but today, specifically, there was a bank that was responsible for 99.99 percent of the dollar's drop," said Hideaki Iha, a market analyst at Souza Barros brokerage in Sao Paulo.
The Sao Paulo Stock Exchange's benchmark Bovespa index gained 1.4 percent to close at 21,755 with gains across all sectors but lower than average volume. The index stands about 2 percent below where it began 2004.
Traders said investors were heartened early on by an upward revision to the US gross domestic product data.
A recovery in the US economy is often associated with the possibility of greater investment in emerging markets like Brazil.
They said they were also pleased to see that there were no more new political rows or new unsettling developments in a graft scandal involving a former presidential palace aide that has weighed on the market over the past two weeks.
Although foreign investors have invested heavily in the Bovespa in February, some players warned that it was too early to say whether the impact of the scandal had blown over as Congress had not sat this week due to the Carnival holidays.
"The main expectation here for next week is the return of Congress, the return of politicians to Brasilia, when we will really see the temperature of the caldron," said Andre Caminada, an equity portfolio manager at Itau Asset Management.
Bovespa gainers outpaced losers by 42 to 10, with two stocks ending stable. Companhia de Bebidas das Americas (AmBev), the world's No. 5 brewer, stood out with a 5.3 percent rise to 779 reais. Its voting stock gained 8.3 percent to close at 720 reais.
Traders put the gain down to bets it would post strong earnings on Wednesday and a resurgence of talk it was planning some kind of alliance with Belgium's Interbrew.
"The last time the Interbrew rumour surfaced it had an impact on the shares," said Pedro Galdi, an analyst at Sudemaris/ABN. "I prefer to believe that it has more to do with the expectations about the result of the last quarter."
AmBev said it would not comment on market rumours.
Analysts expect the results to show beer price rises in the middle of last year and cost savings helped offset a drop in beer volume sales from stiff competition and a weak economy.