Brazil stocks racked up yet another high for the year to date on Friday, as Brazilian stocks followed foreign markets upward after profit-taking in the morning.
The benchmark Bovespa index rose 0.49 percent to 64,071.01, after hitting a new intraday high for the year as investors stayed optimistic about Brazil's economic recovery.
The market isn't operating with 2009 in mind, it's thinking of 2010, said Andre Perfeito, an economist with Gradual Investimentos. Everyone thinks 2010 is going to be an excellent year for Brazil.
The index rose 1.79 percent on Thursday, closing above 63,000 points for the first time since July 1, 2008. It has gained nearly 70 percent so far in 2009.
Brazil's currency, the real, closed nearly flat, strengthening 0.06 percent to 1.737 per dollar despite gains in the dollar elsewhere.
The dollar got a bounce as U.S. Federal Reserve Chairman Ben Bernanke said late on Thursday that the central bank will be ready to tighten monetary policy as an economic recovery takes hold.
The greenback had fallen to a 14-month low against a basket of major currencies .DXY on Thursday as traders turned away from the safe-haven currency.
Boosting the index were the two most heavily weighted stocks on the index, Petrobras and Vale.
State-controlled energy giant Petrobras led gains, up 0.54 percent to 35.64 reais as crude prices rose CLc1.
Vale, the world's largest iron ore producer, climbed 0.41 percent to 38.76 reais.
Banks added to recent gains. Itau Unibanco rose 0.98 percent to 36 reais, Banco Bradesco advanced 0.98 percent to 35.90 reais and Banco do Brasil, Latin America's largest bank by assets, moved up 2.08 percent to 30.88 reais.
Limiting gains were shares of cellular telecommunications company Vivo Participacoes, which sank 3.55 percent to 48.10 reais. Banif Securities downgraded the shares from buy to neutral on Thursday.
Yields on Brazilian interest rate futures contracts <0#DIJ:> largely rose, particularly among medium term contracts. Brazil's central bank is widely expected to raise rates but only in 2010, according to the latest weekly central bank survey of local financial institutions.
The yield on the contract due January 2011 DIJF1 inched to 10.47 percent from 10.45 percent. The yield on the contract due January 2012 DIJF2 remained at 11.49 percent.
The contracts reflect expectations among investors of future interest rates in Brazil. The benchmark rate, the Selic, currently stands at a record-low 8.75 percent after central bank policymakers eased monetary policy to try to jump-start Brazil out of a recession.
Brazil's financial markets will be closed on Monday for a national holiday.
(Reporting by Luciana Lopez, Editing by Chizu Nomiyama)