SAO PAULO, Brazil -- Only days after the Brazilian government threatened to fine five Formula One teams for plastering cigarette ads on their cars, the country's new president backtracked yesterday with a decree allowing the ads until 2005. Earlier this week, the Health Ministry said it might issue up to $8 million Cdn in fines to the teams and to local organizers and sponsors of the Brazilian Grand Prix, which will be held tomorrow at Sao Paulo's Interlagos circuit. But President Luiz Inacio Lula da Silva quietly signed the decree Thursday, and it went into effect yesterday after being published in the official government gazette. The fines would have been levied against Ferrari, McLaren, BAR-Honda, Jordan and Renault.

Reuters, 04.04.03, 10:58 AM ET SAO PAULO, Brazil, April 4 (Reuters) - Brazil's currency firmed slightly early on Friday, buoyed by news of local banks raising cash abroad, but stocks stumbled as investors took profits after a strong run-up. After a brief stint in the red, the Brazilian real gained ground against the dollar for the sixth straight session, firming 0.6 percent to 3.235 to the greenback. The gains, which left the real 9.6 percent stronger so far this year, came after Brazil's top private bank Bradesco <BBDC4.SA> said it had issued $250 million in 14-month bonds and offered 50 million euros in eight-month notes, becoming the latest in a rash of local companies to raise cash abroad. On Thursday, the Banco Real unit of Dutch bank ABN AMRO <AAH.AS>(nyse: ABN - news - people) added another $100 million to a nine-month bond, bringing the total issue to $250 million. "Companies just keep on raising cash, and that means more dollars flowing into the market," said Alexandre Vasarhelyi, head of foreign exchange at ING Bank in Sao Paulo. The mood was also positive in the stock market, but share prices drifted lower as investors cashed in on profits following a 17 percent rally since the start of March. The Sao Paulo Stock Exchange's benchmark Bovespa <.BVSP> index slipped 0.56 percent to 11,939.1 points after closing at its highest level since Jan. 14 on Thursday. "After a rally like the one we've seen over the past month, some profit-taking was bound to come at some point," said Daniel Lemos, an investment analyst at Socopa brokerage in Sao Paulo. "But the outlook remains positive, and proof of that are the bond issues we're seeing." Brazil's stocks, bonds and currency have forged ahead over the past month as hopes mount that the new government of President Luiz Inacio Lula da Silva will manage to push through tough economic reforms seen as key to the country's fiscal health, like overhauling the costly tax and pension regimes. News of the bond issue also lifted Bradesco's share price, which climbed 2.17 percent to 11.75 reais, making it one of the few stocks in positive territory. The heavily-indebted energy sector, which has trekked higher of late in tandem with the real, was among the main targets of profit hunters. Federal holding Eletrobras <ELET6.SA>, which jumped 7 percent on Thursday, was down 1.25 percent at 23.70 reais, while Sao Paulo state distributor Eletropaulo <ELPL4.SA> skidded 3.6 percent to 26.51 reais after surging 11 percent in just one day, but later rallied to 27.30.

Reuters, 04.03.03, 5:25 PM ET NEW YORK, April 3 (Reuters) - Wall Street was pleasantly surprised by the depth of Brazil's Congressional support for an amendment laying the foundation for central bank autonomy, but credit agencies said they are looking for substantial progress on reforms before reconsidering the country's ratings. On Wednesday evening, Brazil's Congress gave the green light to a bill changing the financial system's legal framework, a necessary step in President Luiz Inacio Lula da Silva's plan to give the central bank more independence. The bill was hailed as a key victory for Lula and his far-reaching reform agenda, which includes social security and tax reforms. With a whopping 442 lawmakers supporting the bill -- only 308 were needed -- the vote signaled that Lula can muster up the support for politically sensitive reforms. For the ratings agencies, it was a step in the right direction but any upward movement on Brazil's rating will hinge on further progress on the reform front. The three major credit agencies rate Brazil deep in speculative territory. "I wouldn't say that this in and of itself has ratings implications," said Morgan Harting, sovereign analyst at Fitch Ratings. "But what we are looking for is for Lula to successfully assemble a workable coalition around reform. Seeing strong support in Congress for this legislation is a positive indication that he's moving in that direction," Harting added. Brazil's financial markets were abuzz with rumors on Thursday that Fitch would revise its outlook for Brazil to positive. The talk helped strengthen the currency, the real, to its strongest point against the dollar since September. Fitch rates Brazil's long-term foreign currency at B, or five notches into speculative territory. In March, Fitch changed its outlook on Brazil's ratings to stable from negative, citing a recovery in its trade performance and signs the new government was committed to policies that may put Brazil's finances on a sustainable path. The ratings agencies added that they are still waiting to see the details of Lula's social security reform, which Lula has said he would send to Congress this month. Since the government took power at the turn of the year, the signals are "broadly in the positive direction in terms of keeping the fiscal accounts on track, raising the primary surplus, monetary policy, and the emphasis on these reforms," said Lisa Schineller, a director in Standard & Poor's sovereign ratings group. "But we would like to see the content of some of the reforms, their own projects, put forward," said Schineller. S&P has Brazil's long-term foreign currency rating at B-plus, four notches into junk territory, with a negative outlook. The credit agencies also noted that Brazil's economy still has its weaknesses. "Brazil remains vulnerable to sudden changes in the direction of capital flows," said Ernesto Martinez-Alas, who analyzes Brazil for Moody's Investors Service. Moody's rates the country B2 with a stable outlook. Wednesday's bill had already been approved in the Senate, or upper house, and now needs a second reading in the lower chamber, something not expected to be difficulty after its strong approval.

Reuters, 04.03.03, 2:17 PM ET SAO PAULO, Brazil, April 3 (Reuters) - Brazil's Central Bank sold another $193 million in dollar-linked debt on Thursday, meaning it has rolled over all of the $921 million in similar securities coming due on April 17. The bank said in a statement it sold debt maturing in July 2005 and January 2008 at interest rates of 10.06 percent and 11.18 percent, respectively. The rates were a bit lower than it paid in recent auctions. Earlier in the day, the bank sold $727 million in similar securities. After struggling to sell debt in the run up to presidential elections last year, Brazil's Central Bank has managed to roll over nearly all of the debt it has had coming due so far in 2003 as investors warm to the new center-left government of President Luiz Inacio Lula da Silva. The successful debt auctions have also helped to prop up Brazil's currency, the real , which has gained nearly 9 percent so far this year despite market jitters sparked by the war in Iraq. On Thursday, the real closed at 3.255 per dollar, its strongest level since early September.

Reuters, 04.03.03, 10:13 AM ET By Todd Benson SAO PAULO, Brazil, April 3 (Reuters) - Brazil's stock market trotted higher early on Thursday, riding a fresh wave of optimism after Congress paved the way for Central Bank autonomy. The Brazilian currency, however, drifted sideways to lower in thin trade, giving up early gains as investors awaited a Central Bank debt auction scheduled for later in the day. The real , which gained nearly 4 percent over the past four sessions, was down almost 1 centavo at 3.269 per dollar. Stocks, meanwhile, headed higher for the third straight day, lifting the Sao Paulo Stock Exchange's benchmark Bovespa <.BVSP> index 0.53 percent to 11,935.3, within spitting distance of the psychologically important 12,000-point mark. The gains came after an overwhelming 442 congressmen gave the nod late on Wednesday to a constitutional amendment that allows for future legislation giving the Central Bank autonomy from the executive branch. Only 13 vote against the bill, while 17 abstained. Though markets had anticipated the outcome, the resounding vote count fueled hopes that the new government of President Luiz Inacio Lula da Silva is gaining the political clout needed to push through other tough economic reforms, like overhauling the country's cumbersome tax and pension regimes. "This shows that when the executive puts all of its forces to muster support in Congress, it can get its way," said Marcelo Salomon, chief economist at ING Bank in Sao Paulo. "It's a good start, but it doesn't necessarily mean the government will easily get such a large amount of votes for other reforms," he added. "There's still a lot of hard political work to be done down the line." Investors also had a fresh batch of good economic news to chew on. Data released on Thursday showed that inflation in Sao Paulo, Brazil's richest and most populous city, dropped sharply in March to 0.67 percent from 1.61 percent in February. The numbers were the latest to confirm that inflation in Latin America's largest economy is finally losing steam, prompting many in the market to speculate that an interest rate cut may be in store later this month. In the stock market, the real's surge of late continued to benefit companies with hefty debt loads in dollars, such as long-distance carrier Embratel Participacoes <EBTP4.SA>. Stock in Embratel, the Brazilian unit of bankrupt telephone giant WorldCom Inc. <WCOEQ.PK>, was up 1.6 percent at 3.82 reais in early trading. Brazil's leading cable company Net Servicos de Comunicacao <PLIM4.SA>, another debt-ridden firm, jumped 6.67 percent to 0.32 reais in modest trade, adding on to a 7 percent surge on Wednesday. On the downside, bellwether stock Tele Norte Leste Participacoes, or Telemar <TNLP4.SA>, slipped 0.33 percent to 29.95 reais. The phone company is the heaviest weighted stock on the Bovespa, accounting for 14 percent of the index.