Brazil's Telemar Declines; Mexico's Walmex Gains: Latin Stocks

June 11 (<a href=quote.bloomberg.com>Bloomberg) -- Brazil's stock index fell for a second day in three, led by Tele Norte Leste Participacoes SA, the country's largest phone company, on investor concern the government will grant fixed-line operators a lower-than-expected rate increase.

The benchmark Bovespa index of the most-traded stocks on the Sao Paulo stock exchange fell 0.8 percent to 13,786.85 at 1:12 p.m. New York time. The Bolsa index of shares traded on the Mexican stock exchange in Mexico City rose 25.95, or 0.4 percent, to 6950.94.

Finance Minister Antonio Palocci, who met with phone company officials last night, said a planned increase on tariffs for fixed- line service will be lower than the IGP-DI inflation rate -- currently at 30.05 percent for the 12 months ending in May -- that was stipulated under their contract.

We need to know what the rate increase will be to assess a fair price for the shares,'' said Debora Morsch, who helps manage the equivalent of about $52 million in stocks for Solidus Administradora de Recursos SA in Porto Alegre, Brazil. It seems negotiations aren't going very smoothly.''

The communications ministry was supposed to release the rate increase for the phone calls last night but said that after meeting with the companies it would make public a decision by the end of the week.

In other markets, the main stock indexes in Argentina ad Peru rose, while in Chile and Venezuela they fell.

The following stocks are having significant gains or losses in Latin American markets today. Symbols are in parentheses after the company name. In Brazil the preferred share is usually the company's most-traded class of stock.

Brazil

Telemar (TNLP4 BS) fell for a third day, losing 60 centavos, or 1.7 percent, to 35 reais.

Cia. Energetica de Sao Paulo (CESP4 BS), the power generator for Brazil's biggest city, fell 39 centavos, or 4.5 percent, to 8.25 reais. ``Cesp is not a company we recommend due to its high indebtedness,'' said Pedro Batista, an analyst with Banco Pactual SA in Rio de Janeiro.

Empresa Brasileira de Aeronautica (EMBR4 BS), the world's fourth-largest aircraft maker, rose 11 centavos, or 0.8 percent, to 13.98 reais, adding to a 17 percent jump yesterday after JetBlue Airways Corp. placed an order for 100 new Embraer-190 jet aircraft. Embraer values the contract at $3 billion, with a potential value of $6 billion if all 100 options are exercised. ``We are have a small position in Embraer and after this announcement we are reconsidering to see if it would be a interesting to increase it,'' Solidus' Morsch said.

Petroleo Brasileiro SA (PETR4 BS), the state-controlled oil company, rose 29 centavos, or 0.6 percent, to 52.99 reais. Petrobras remains one of our top picks,'' Marcelo Mesquita, an equity strategist with UBS Warburg SA, wrote in a report. We believe there is a buying opportunity ahead of what we expect to be strong second-quarter results.''

Mexico

Cemex SA (CEMEXCP MM), the world's third-largest cement maker, slid 1.11 peso, or 2.3 percent, to 47.10 pesos after Daniel Altman, an analyst at Bear Stearns & Co. in New York, downgraded his recommendation on the stock to peer perform'' from outperform.'' ``We continue to view Cemex as a show-me story and are reluctant to adjust higher our estimates and target until we see further signs of progress,'' he wrote in a research note.

Fomento Economico Mexicano SA (FEMSAUBD MM), Mexico's largest beverage company, gained 66 centavos, or 1.5 percent, to 44.15 pesos. The shares have gained 16 percent this year.

Grupo Financiero Banorte SA (GFNORTEO MM), Mexico's fourth- largest bank, slipped for the third day in four, losing 24 centavos, or 0.8 percent, to 28.51 pesos. Roberto Attuch, an analyst at Credit Suisse First Boston, cut his rating on the bank to underperform'' from neutral'' this week on concern low interest rates will hurt the bank's profit.

Wal-Mart de Mexico SA (WALMEXV MM), Mexico's largest retailer rose 34 centavos, or 1.1 percent, to 30.40 pesos, after reaching a 52-week high of 30.5 pesos in earlier trading. Expectations for stronger U.S. growth in the second half of the year may help boost consumption in Mexico. The U.S. buys almost 90 percent of Mexican exports, accounting for a quarter of the country's $600 billion gross domestic product.

Argentina

Grupo Galicia (GGAL AR), the country's second-largest bank, rose 4 centavos, or 3.6 percent, to 1.15 peso, heading to its highest price since July 2001 after the bank reported its first- quarter loss narrowed to 59 million pesos ($21 million) from 2 billion pesos in the same period last year.

Molinos Rio de la Plata SA (MOLI AR), which produces pasta and oils, rose 8 centavos, or 1.6 percent, to 5.18 pesos. The company paid $4.5 million to buy the remainder 39 percent of winemaker Bodegas Nieto Senetiner SA.

Peru

Edegel (EDE PE), Peru's biggest non-government power generator, rose 3 centimos, or 2.4 percent, to 1.26 soles. Last week, the company sold 100 million soles in local bonds to replace dollar-denominated maturing debt. Most of the company's revenue is denominated in sol currency.

Grana y Montero SAA (GRAM/C PE), Peru's leading construction company rose 1 centimo, or 3.1 percent, to 33 centimos. The company plans to sell $50 million in bonds in the Peruvian market to finance development projects.

Volcan Cia. Minera SA (VCM/B PE), Peru's main zinc producer, rose 1 centimo, or 3.1 percent, to 33 centimos. The company has said it allowed due diligence review of its assets and books to a Swiss, a Brazilian and a Peruvian company as it looks for a partner. Volcan had reported annual for the past two years because of weak zinc prices.