June 11 (<a href=quote.bloomberg.com>Bloomberg) -- Brazil's currency closed at its strongest level since July after the central bank sold $762 million of contracts used to guard against declines in the real, reducing demand for dollars from traders.

The real rose 0.6 percent to 2.8515 per dollar after falling as low as 2.8835 in Sao Paulo. The real's 24 percent gain in 2003 is the best performance of the 16 most widely traded currencies. Mexico's peso rose.

The central bank's swap sale should help the currency by giving traders insurance against future declines, easing the need to buy dollars in the swap market. The bank sold 72.9 percent of the contracts, known as interest rate swaps, that mature June 18, prompting some investors to anticipate another sale.

The central bank will come back and roll over the rest,'' said Carlos Gandolfo, a partner at Pioneer Corretora de Cambio Ltda., a Sao Paulo currency brokerage that handles about a third of trading in Brazil's spot market. It was the bank's decision, had nothing to do with demand and was absolutely within expectations.''

Brazil has about $58 billion reais of outstanding swaps and dollar-indexed national Treasury notes. Most were sold to bolster the real against the dollar amid Argentina's 2001 default and investor concern Brazilian President Luiz Inacio Lula da Silva, elected in October, might default on $400 billion of public debt. The real last closed at a stronger level than 2.8515 on July 18.

Balance

Government officials want to cut the dollar-risk of selling the swaps, which oblige the central bank to pay investors for declines in the value of the real. Companies that need to pay for imports or foreign debts have bought the swaps as a hedge against a weakening in Brazil's currency before buying dollars.

At the same time, investors can buy the swaps instead of buying dollars, and so reduce demand for dollars and prevent a weakening of the real. Some Lula administration officials and exporters have voiced concern that the real's gains in 2003 might undercut a surge in exports that has been a motor of growth.

To be sure, with consumer prices accelerating at their fastest pace in seven years after the real's 35 percent decline in 2002, many investors expect the bank to slowly reduce the amount of swaps outstanding to head off another bout of currency weakness and inflation. A renewed pick-up in inflation might delay cutting lending rates that are now at four-year highs and are weighing on the economy.

``It's possible the central bank will start reducing gradually the amount of rollover,'' said Marco Antonio Azevedor, foreign exchange manager at Banco Brascan in Rio de Janeiro.

Brazil's benchmark 8 percent bond that matures in 2014 rose .13 cent to 91.63 cents on the dollar, reducing the yield to 10.05 percent, according to J.P. Morgan Chase & Co.

Mexico, Chile

Mexico's currency gained after the yields on government debt rose at yesterday's government debt auction, damping concern that the central bank will cut interest rates this Friday.

The peso rose for the second day in three, gaining 0.8 percent to 10.5730 per dollar from 10.6590 yesterday in Mexico City and U.S. trading, paring its loss in 2003 to 1.9 percent.

``You have a bit of a recovery in interest rates, which is helping the peso a bit,'' said Guillermo Estebanez, a currency strategist at Banc of America Securities Inc. in San Francisco.

Last week's four-day, 4.1 percent peso decline threatened to revive inflation and boosted the odds the central bank would move to cut interest rates, said Edgar Amador, an economist at Stone & McCarthy in Mexico City. Yesterday, the 28-day government yield rose to 5.64 percent from a record low of 4.72 percent.

Record-low government yields, falling consumer prices in May and remarks by central bank officials that the Mexican economy is growing less than expected, last week triggered sales of peso future contracts on the Chicago Mercantile Exchange. Investors had built up a record high level of contracts betting on the peso's appreciation in May, accumulated during the currency's 10 percent rise from March 5 to May 13.

Chile's peso rose for the first day in three, gaining 0.4 percent to 714.35 per dollar from 717.25 yesterday.

Colombia, Argentina

Colombia's peso weakened 0.4 percent to 2,827.50 per dollar and Argentina's peso weakened 0.5 percent to 2.8225 per dollar. Argentina's peso is the second-best performing currency against the dollar in 2003 among 59 tracked by Bloomberg, rising 19 percent.

Peru's new sol strengthened 0.2 percent to 3.4828 per dollar. Venezuela fixed its bolivar at 1,598 per dollar this year.

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.

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.

June 11 (<a href=quote.bloomberg.com>Bloomberg) -- The Organization of Petroleum Exporting Countries, pumping at near-record levels, agreed to leave its oil quotas in place as delays in Iraqi sales drive up prices, the group's president said.

``There is an agreement now to keep the oil production and the quotas unchanged,'' said OPEC President Abdullah bin Hamad al- Attiyah in Doha, Qatar, where the group is meeting today. The group will reconvene on July 31, an OPEC spokesman said.

Ministers from the United Arab Emirates, Kuwait, Iran and Libya earlier today said the group has no need to make changes. Cutbacks may come in the third quarter, ministers said, as Iraqi shipments rise to near prewar levels of 2.5 million barrels a day, 3 percent of the world's total.

OPEC is lobbying non-members including Norway and Mexico for support in restraining output later this year, seeking to keep prices within the cartel's target range of $22 to $28 a barrel. OPEC's price index was at $27.53 a barrel, up 22 percent in the past year. Crude oil was down 20 cents at $27.90 a barrel as of 10:06 a.m. in London on the International Petroleum Exchange.

Ministers instead of reducing quotas have called for greater compliance with the existing targets. OPEC's 10 members outside of Iraq in May pumped 26.4 million barrels a day, according to Bloomberg estimates, above the group's goal by 1 million barrels.

Iraqi exports stopped when U.S. and British forces invaded on March 20 to oust President Saddam Hussein over allegations he was amassing weapons of mass destruction. Looting since then has hampered efforts to restore production. The nation is now producing 700,000 barrels a day, which may rise to 1.5 million this month, officials have said.

`Balanced Market'

There is now almost a balanced market,'' said Abdulhasid Mahmoud Zlitni, Libya's top oil official, in Doha. Looking ahead to the arrival of Iraq oil on the market, if members do not cut supply to the level of production agreed to in Vienna, there will be 600,000 to 800,000 barrels of oversupply,'' he said.

Oil officials in Iraq have said the nation will take months to get to normal. The head of Iraq's northern oil fields said the export pipeline to Ceyhan, Turkey, may be shut for eight weeks because theft has disabled control systems. The southern manager said output will peak this month at 800,000 barrels a day, barely a third of prewar levels, until security resumes.

The situation in Iraq is a lot worse than people are being led to believe,'' said Tony Zafar, a trading manager at 5D Ltd., an oil-trading company. There is no way production will be up and running in two month's time, so OPEC doesn't need to worry about an oil glut anytime soon.''

Russia

In addition to its own reductions, OPEC is lobbying non- members Russia, Norway, Mexico and Oman for cutbacks. Norway this week has said it may consider such a move if prices drop. The nations have in the past cooperated with OPEC to restrict supplies and keep prices high.

The interests of Russia and OPEC concur in many ways,'' said Russian deputy minister of fuel and energy Alexander Voronin in Doha. But making decisions on how much oil to export, Russia, as it did before, will proceed from the needs of the Russian economy and the necessity of increasing the living standards of our population.''

Oil inventories are falling in the U.S., the world's largest energy consumer, also bolstering prices. Supplies are at 289 million barrels, according to government estimates, down 11 percent in the past year.

Oil inventories in industrialized countries are relatively tight for this time of year,'' al-Attiyah said. This may serve to support oil prices in the coming months.''

OPEC's 11 members are Saudi Arabia, Iran, Iraq, Kuwait, the United Arab Emirates, Qatar, Algeria, Nigeria, Libya, Indonesia and Venezuela.

<a href=www.falkland-malvinas.com>MercoPress Falklands-Malvinas Wednesday, 11 June

The Organization of American States, OAS, 33rd. General Assembly meeting in Santiago de Chile approved by acclamation the resumption of negotiations between Argentina and United Kingdom in order to find as soon as possible a solution to the Falklands/Malvinas sovereignty dispute.

Last meeting in Chile The resolution was proposed by Argentina and sponsored by Brazil and Chile expressing OAS satisfaction given the Argentine government’s willingness to continue exploring “all possible avenues for a peaceful settlement of the controversy and its constructive approach towards the inhabitants of the Malvinas Islands”

The General Assembly also decided to continue to examine the issue “at its subsequent sessions until a definitive solution is reached”.

The proposal was presented by Argentine Deputy Secretary of Foreign Affairs Jorge Taillán who described the recovery of the disputed Islands as a “permanent, indeclinable objective” for Argentina. Mr. Taillán added that the Argentine government reiterates its full willingness “to resume Malvinas sovereignty discussions”, convinced of the need to find “a peaceful, definitive and negotiated solution” to the protracted controversy.

Delegates from Brazil, Chile, Venezuela, Paraguay, Panama, among others, reiterated their support requesting a quick resumption of sovereignty talks between Argentina and the United Kingdom.

The United Kingdom is a permanent observer of OAS since 1995.