"Brazil Stocks End Higher, Real Weaker In Calm Reaction To Elections "

Brazilian markets reacted calmly Monday to an unexpected twist in the country's presidential elections, with stocks ending slightly higher and the real currency weaker. The benchmark Ibovespa stocks index closed 0.2% higher, at 70,385 points, on volume of 5.86 billion Brazilian reals ($3.46 billion), holding onto the key 70,000 point mark surpassed last week. The real currency, meanwhile, backed off its strongest level in two years to end weaker, at BRL1.6917 to the dollar, as the greenback posted solid gains around the globe. "The markets were tranquil, which is in stark contrast to when President Lula was elected to his first term," said Clodoir Vieira, chief economist at Sao Paulo-based trading house Souza Barros. Foreign investors sold off stocks and the real weakened sharply on concerns that the former union firebrand would create an economic upheaval when he assumed the presidency in January 2003, with the currency sliding to BRL4.0 to the dollar. The market's reaction Monday showed the "consolidation and maturity of Brazil's democracy," Vieira said. Rousseff won 47% of the vote, while challenger Jose Serra of the centrist Social Democrats claimed 33% of the vote. Third party candidate Marina Silva of the Green Party, or PV, surprised by netting 19% of the vote. Silva's performance set up the showdown between Rousseff and Serra, who will not only now battle each other but also attempt to woo Green Party voters to their side. Rousseff holds a distinct advantage based on the PT's left-of-center roots. "The Green Party vote is a leftist vote, so I think it will be very difficult for Green Party voters to migrate to Serra," said Julio Hegedus, an economist at Sao Paulo brokerage house Interbolsa. The impact of the elections, which included gubernatorial races and seats in Brazil's Senate and Chamber of Deputies, was felt in some areas. Electric utilities in some states advanced because of first-round victories by market friendly governors, who should allow tariffs