Brazil's main stock index was lifted to a record high close by optimism in the local economy on Friday, while the reopening of a Brazilian bond helped drive the country's currency to a fresh 2-1/2-year high against the dollar. Traders said weaker-than-expected US jobs data had also helped Brazilian shares by easing fears of aggressive US interest rate hikes, which could lure away investments from emerging markets.
The Sao Paulo Stock Exchange's benchmark Bovespa index rose 1.06 percent to an all-time high close of 25,467.9 points. The index, which has beaten its record high close three times this week, has gained 14.5 percent this year.
The real firmed 0.89 percent to 2.709 reais per US dollar, the currency's strongest close since June 19, 2002.
"Brazil is being favoured in the search for investment returns. Everyone is optimistic about the economic data," said Lucio Graccho, a director at HSBC Asset Management.
On Wednesday, Brazil's government statistics agency said gross domestic product grew 6.1 percent in the third quarter from a year earlier, its fastest year-on-year growth since 1996. Unemployment is also falling and exports are booming.
Traders said the market was also cheered by Brazil's move to launch another $500 million of its global bond due 2014.
"The issue shows there is demand abroad for Brazilian debt and that is always positive," said Jorge Kattar, derivatives manager at Rabobank.
Brazil's country risk rating, defined as the difference between yields on the country's sovereign bonds and US Treasuries, fell this week to its lowest level since October 1997, when the Asia crisis rattled global markets.
Falling country risk suggests foreign investors are increasingly betting on Brazil, along with other emerging markets, as the US dollar tests recent lows.
On the Bovespa, gainers outpaced losers by 39 to 14, even though some traders have been warning that a bout of profit taking is on the way. One stock ended steady.
Power companies stood out ahead of Brazil's first big auction of electricity next Tuesday, which analysts say will bring a modest increase in prices, mop up excess energy in the market, and help utilities that have yet to recover from a crisis in the sector.
Federal power company Eletrobras was among the top percentage gainers, with a 6.15 percent rise to 47.28 reais. Other power companies like Cesp, Cemig, and Copel also gained ground.
Companhia Vale do Rio Doce, or CVRD, the world's biggest iron ore producer, eased 0.29 percent to 54.80 reais, despite an agreement to team up with German company ThyssenKrupp Stahl AG to build a steel plant in Brazil.
"We believe this is another piece of good news for CVRD, given that the company will be a partner in another project which will promote the consumption of its iron ore," Luiz Caetano, an analyst at Brascan, said in a research note.