SAO PAULO, Brazil, June 10 (UPI) -- Brazil's President said Tuesday he will visit the Middle East later this year and defended the creation of a Palestinian state.

The exact date for the president's trip was not given, though Brazilian Foreign Minister Celso Amorim is scheduled to head to the region later this month.

The announcement by President Luiz Inacio Lula da Silva comes on the same day the Lebanese prime minister -- in Brazil on an official visit -- endorsed Brazil's appointment to the U.N. Security Council as a permanent member.

Several of Brazil's neighbors have also endorsed its admittance to the council.

Since assuming office in January, Lula has played a much larger role in international affairs than his predecessor, Fernando Henrique Cardoso, playing a role in helping end the general strike in Venezuela and was an outspoken critic of the U.S. decision to invade Iraq without the permission of the Security Council.

May 28 (<a href=quote.bloomberg.com>Bloomberg) -- Brazil's real gained for the fourth day in six on investor expectations of new capital flows as local industrial companies and banks sell bonds abroad.

The real rose 0.5 percent to 3.0120 per from 3.028 yesterday. The real has gained 18 percent against the dollar in 2003, the best performance of the 16 most widely traded currencies. Mexico's peso strengthened.

Brazil's Banco Votorantim SA, the finance arm of the Votorantim cement, mining and industrial group, said it plans to sell at least $100 million of two-year bonds. Banco Bradesco SA, Brazil's third-largest commercial bank, yesterday said it plans to sell $50 million of 18-month bonds, and Cia. de Saneamento Basico do Estado de Sao Paulo, the country's largest water and sewerage company, said it plans to sell $200 million of debt in the next two weeks.

The capital flows are still coming,'' said Flavio Farah, head of the Treasury department at the Sao Paulo unit of Westdeutsche Landesbank Girozentrale. There seems to be a growing feeling the real will hold around 3 to the dollar for the near term.''

Brazilian banks have received the bulk of the more than $5 billion borrowed overseas by corporate Brazil this year. They have taken advantage of low rates abroad, benchmark U.S. Treasury debt yields are at their lowest in more than 40 years, to buy Brazilian government bonds paying yields at four-year highs.

The U.S. 10-year Treasury bond, a benchmark for U.S. borrowing, yields 3.42 percent while the benchmark Brazilian rate is 26.5 percent. Thirteen-month Brazilian, fixed-rate notes were sold to yield 23.54 percent yesterday.

Meirelles

Investor expectations that Brazilian yields may remain high were supported by Brazilian central bank President Henrique Meirelles today, who told a congressional committee in the capital, Brasilia, that inflation has not yet ``controlled.''

The 12-month inflation rate in April was 16.8 percent, almost twice the government's 8.5 percent target for 2003. Meirelles' comment raised investors expectation rates may not decline after central bank monetary policy meetings next month.

Meirelles is just following a synchronized speech: that they won't bow to pressure unless inflation subdues effectively,'' said Sandra Utsumi, chief economist with BES Securities do Brasil in Sao Paulo. In a way, they are saying `This may not be the right time to cut rates.'''

Interest rates rose in the futures market.

The overnight interest-rate futures contract for Jan. 2 settlement, the most-traded on Sao Paulo's BM&F futures and commodities exchange rose 4 basis points to 24.17 percent. The contract reflects interest-rate expectations for the end of December. A basis point is 0.01 percentage point.

Brazil's 8 percent bond maturing in 2014 rose a quarter cent to 89 cents on the dollar, pushing the yield down to 10.73 percent, according to J.P. Morgan Chase & Co.

Mexico

Mexico's peso rebounded from its biggest decline in four months to rise on investor expectations an economic rebound in the U.S. will boost demand for Mexico's exports from its biggest customer.

The peso strengthened 0.5 percent to 10.3720 per dollar after declining 1.8 percent to 10.4225 yesterday, its largest one-day loss since Jan. 21.

The peso on March 6 fell to a record low of 11.2644 per dollar on investor concern U.S. growth might stall this year amid indications the Mexican economy might contract. The U.S. buys about 85 percent of Mexico's exports, accounting for a quarter of its $600 billion economy, and is behind about 70 percent of the foreign investment flow into Latin America's largest economy

The currency fell yesterday after yields on the government's benchmark 28-day Treasury notes fell to 4.91 percent, 1 basis point above the record low reached two weeks ago, prompting some investors to seek higher returns in other markets.

Regional Currencies

Argentina's peso declined for the fourth day in five, losing 0.6 percent to 2.8825 per dollar from 2.8650 per dollar.

Chile's peso weakened for a second day, losing 0.5 percent to 713.85 per dollar, while Colombia's peso fell for a third day, shedding 0.5 percent to 2,879.50 per dollar.

Peru's new sol weakened 0.1 percent to 3.4948 per dollar from 3.4920 per dollar yesterday after President Alejandro Toledo declared a 30-day state of emergency, calling in the army to reopen roads blocked by farmers and to put an end to a strike by 300,000 teachers. Venezuela fixed its bolivar at 1,598 per dollar earlier this year. Last Updated: May 28, 2003 17:27 EDT

May 28 (<a href=quote.bloomberg.com>Bloomberg) -- Brazil's real gained for the fourth day in six on investors' expectations of new capital flows as local industrial companies and banks sell bonds abroad.

The real rose 0.5 percent to 3.0140 per dollar at 2:29 p.m. New York time from 3.028 yesterday. The real has gained 17 percent against the dollar in 2003, the best performance of the 16 most widely traded currencies. Mexico's peso strengthened.

Brazil's Banco Votorantim SA, the finance arm of the Votorantim cement, mining and industrial group, today said it plans to sell at least $100 million of two-year bonds. Banco Bradesco SA, Brazil's third-largest commercial bank, yesterday said it plans to sell $50 million of 18-month bonds, and Cia. de Saneamento Basico do Estado de Sao Paulo, the country's largest water and sewerage company, said it plans to sell $200 million of debt in the next two weeks.

The capital flows are still coming,'' said Flavio Farah, head of the Treasury Dept. at the Sao Paulo unit of Westdeutsche Landesbank Girozentrale. There seems to be a growing feeling the real will hold around 3 to the dollar for the near term.''

Brazilian banks have borrowed the bulk of the more than $5 billion borrowed overseas by corporate Brazil this year. They have taken advantage of low rates abroad, benchmark U.S. Treasury debt yields are at their lowest in more than 40 years, to buy Brazilian government bonds paying yields at four-year highs.

The U.S. 10-year Treasury bond, a benchmark for U.S. borrowing, yields 3.43 percent while the benchmark Brazilian rate is 26.5 percent. Thirteen-month Brazilian, fixed-rate notes were sold to yield 23.54 percent yesterday.

Meirelles

Investor expectations that Brazilian yields may remain high were supported by Brazilian central bank President Henrique Meirelles today, who told a congressional committee in the capital, Brasilia, that inflation has not yet ``controlled.''

The 12-month inflation rate in April was 16.8 percent, nearly twice the governments 8.5 percent target for 2003. Meirelles' comment raised investors expectation rates may not decline after central bank monetary policy meetings next month.

Meirelles is just following a synchronized speech: that they won't bow to pressure unless inflation subdues effectively,'' said Sandra Utsumi, chief economist with BES Securities do Brasil in Sao Paulo. In a way, they are saying `This may not be the right time to cut rates.'''

Overnight interest rates rose in the futures market.

The overnight interest-rate future for Jan. 2 settlement, the most-traded on Sao Paulo's BM&F futures and commodities exchange fell 7 basis points to 24.1 percent. The contract reflects interest-rate expectations for the end of December. A basis point is 0.01 percentage point.

Brazil's 8 percent bond maturing in 2014 fell 0.56 cent to 88.69 cents on the dollar, pushing the yield up to 10.82 percent, according to J.P. Morgan Chase & Co.

Mexico

Mexico's peso rebounded from its biggest decline in four months to rise on investor expectations an economic rebound in the world's largest economy will boost demand for Mexico's exports from its biggest customer.

The peso strengthened 0.4 percent to 10.3825 per dollar after declining 1.8 percent to 10.4225 yesterday, its largest one-day loss since Jan. 21.

The peso on March 6 fell to a record low of 11.2644 per dollar on investor concern U.S. growth might stall this year amid indications the Mexican economy might contract. The U.S. buys about 85 percent of Mexico's exports, accounting for a quarter of its $600 billion economy, and is behind about 70 percent of the foreign investment flow into Latin America's largest economy

The currency fell yesterday after yields on the government's benchmark 28-day Treasury notes fell to 4.91 percent, 1 basis point above the record low reached two weeks ago, prompting some investors to seek higher returns in other markets.

Regional Currencies

Argentina's peso declined for the fourth day in five, losing 0.6 percent to 2.8825 per dollar from 2.8650 per dollar.

Chile's peso weakened for a second day, losing 0.5 percent to 713.85 per dollar, while Colombia's peso strengthened for the first day in three, rising 0.3 percent to 2,857.00 per dollar.

Peru's new sol was little changed at 3.4964 per dollar from 3.4920 per dollar yesterdy. Venezuela fixed its bolivar at 1,598 per dollar earlier this year. Last Updated: May 28, 2003 14:30 EDT

Sun May 25, 2003 02:24 PM ET By Susan Schneider

NEW YORK, May 25 (<a href=reuters.com>Reuters) - Emerging debt is expected to take its cues again from Brazil in the week to come as investors eye the government's structural reforms and sift through a spate of inflation data for signs the Central Bank might have room to lower sky-high interest rates.

Argentina is also slated to be in the limelight as Wall Street awaits the initial policy decisions of President Nestor Kirchner, who assumes the leadership of the financially battered nation on Sunday.

While investors are unlikely to shift the sanguine view of emerging markets they have held since the turn of the year, they will be watching Brazilian President Luiz Inacio Lula da Silva for signs of progress on his promised overhaul of the tax and pension systems.

Once U.S. investors return from Monday's Memorial Day holiday, they will also eye inflation data to determine if an easing of the benchmark Selic interest rate, now at a four-year peak of 26.5 percent, might be possible at the June meeting of the Central Bank's monetary policy meeting. The rate is widely seen as a chokehold on investment and industrial production.

"We need to continue to see good inflation numbers that will allow the Central Bank to cut rates finally in June or July, and continued progress on the reform front," said Jim Barrineau, vice president in emerging markets research at Alliance Capital Management.

Brazil has spearheaded a bonanza in emerging markets this year. With U.S. interest rates at rock bottom, investors have been looking to other markets for higher yield and Lula's sound fiscal management and reforms have proved to be key draws.

The mix of Brazil optimism and a steady siphoning of funds to emerging markets has helped send Brazilian bond prices a dizzying 41 percent higher so far this year.

Argentina, meanwhile, may prove to be more of a trouble spot. Kirchner, a former governor, must act fast to sew up a long-term deal with the International Monetary Fund and jump start negotiations with investors left in limbo by last year's default on some $60 billion in debt, analysts said.

Kirchner's economy minister, Roberto Lavagna, has said he wants to start IMF talks as soon as possible after the lender withheld approval of a loan review because the outgoing government had not made market friendly reforms it agreed upon.

Still, some analysts expected Kirchner to take a tough line with the IMF as he tries to appease a population forced into poverty by Argentina's economic meltdown.

On Friday, for example, Lavagna said Kirchner would not veto a law that stops banks from repossessing homes, an issue the IMF has said is a concern.

"They have something like $3 billion in repayments coming due to multilaterals that are not extendable," said Suhas Ketkar, senior economist and head of emerging markets analysis at Royal Bank of Scotland. "The pressure will be there to reach an IMF agreement but they will play hardball."

Another focus will be Venezuela, whose bonds have lagged the broader market amid a bitter political standoff between President Hugo Chavez and his foes. In the latest bout of violence, one person was killed and 22 injured after gunfire broke out at an opposition rally in a pro-Chavez district.

The violence came after the government and opposition said Friday they agreed to a political pact to hold a referendum on Chavez's rule, which aims to end the standoff. But investors viewed the the pact with skepticism.

"I think what people are waiting to see is if this referendum is absolutely nailed down. Is it going to happen or can Chavez delay it?" said Barrineau. (Reporting by Susan Schneider, editing by Walker Simon; Reuters Messaging: susan.schneider.reuters.com@reuters.net, tel: +1 646 223 6319)

May 24 (<a href=quote.bloomberg.com>Bloomberg) -- Brazilian President Luiz Inacio Lula da Silva said he will ask members of the Rio Group of 19 Latin American nations to allow Cuba's presence at the organization's annual summit next year in Brazil.

The Rio Group, which serves as a forum for cooperation among members, has excluded Cuba since its creation in 1986.

``Since the next meeting is in Brazil, I plan to consult all members of the Rio Group so that Cuba could take part, at least as a special guest, in our meeting,'' Lula, a former union leader, said in a press conference at the end of this year's Rio Group summit in Cuzco, Peru, 1,165 kilometers (725 miles) southeast of Lima.

In the two-day Cuzco summit, Rio Group presidents agreed in to support an accord between Venezuelan leader Hugo Chavez's government and the opposition for a referendum. Presidents also called for the United Nations to push rebels to join peace talks in Colombia.

The Rio Group includes Argentina, Bolivia, Brazil, Chile, Colombia, Costa Rica, Dominican Republic, Ecuador, El Salvador, Guatemala, Guyana, Honduras, Mexico, Nicaragua, Panama, Paraguay, Peru, Uruguay and Venezuela.

The group doesn't have a permanent headquarters office and only works around annual presidential meetings. Last Updated: May 24, 2003 14:35 EDT