Brazilian stocks rose on Friday, erasing their losses so far this year after the latest US economic data soothed investors fears that the Federal Reserve might aggressively tighten monetary policy.
Energy stocks bolstered the market on expectations new regulations for the sector, put into force on Friday, will pave the way for much-needed infrastructure investments in the country.
The Sao Paulo Stock Exchange's benchmark Bovespa index ended 0.49 percent higher at 22,336 points, 5.62 percent higher for the month and slightly above the closing level at the end of 2003.
Brazil's currency, the real, ended almost stable at 3.038 reais per US dollar, around 1.6 percent higher since June 30. The United States' gross domestic product expanded an annualised 3 percent in the second quarter, below market expectations of a 3.6 percent rise.
The result made investors more confident the US Federal Reserve will be gradual in raising interest rates, which is potentially harmful to Brazil as it draws money out of emerging nations to safe-haven US Treasury notes.
But local gains were curbed by oil prices, which closed at an all-time high of $43.80 per barrel.
"The market is paying attention to the oil price. It's Friday and nobody wants to take big investment positions," said Flavio Barros, a trader at Clickinvest brokerage in Sao Paulo. State owned energy company Eletrobras was the biggest winner in the Bovespa index as its shares rocketed 4.49 percent to 43.53 reais. Steel companies also posted big gains after French giant Arcelor released an upbeat outlook for steel demand in the second half of 2004. Gerdau and Usiminas' preferred shares climbed 2.96 percent and 2.74 percent respectively.