Brazilian stocks fell in midday trading on Friday for the fourth day in a row as investors reaped profits from a rally earlier this year they said pushed the market too high, too quickly.
The Sao Paulo Stock Exchange's Bovespa index fell 0.55 percent to 22,834.3 after surging 9 percent in the first seven sessions of the year and a stunning 97 percent in 2003.
"We have a day of profit taking that is part of the same process," said Mauricio Gallego, a trader at Concordia brokerage, calling the pullback "healthy."
Gallego said the index could fall as low as 22,300, near its finish in 2003, before renewing an upward trend to rise between 20 percent and 30 percent in 2004.
The Bovespa's heaviest-weighted stock, Tele Norte Leste Participacoes (Telemar), fell 1.03 percent to 46.27 reais. Telemar accounts for 14 percent of the 54-stock index.
Out of sync with the broader market, Brasil Telecom Participacoes rose 0.63 percent to 24.05 reais, a day after the company won approval from telecommunications regulator Anatel to expand operations and start a new mobile phone business.
Anatel also ruled Telecom Italia could increase its stake in Brasil Telecom's parent company and set an 18-month deadline for reaching an accord with the fixed-line company's shareholders over the two potentially competing licenses for mobile services.
On the foreign exchange market, the Brazilian real hovered near the levels of Thursday's close as traders kept an eye out for fresh dollar purchases from the Central Bank that might seek to restrain the real currency from rising too high amid heavy capital inflows.
In mid-day trading, the real strengthened to 2.814 per US dollar from 2.815 a day earlier.
"We're still depending on the Central Bank to correct the exchange rate," said Hideaki Iha, senior currency trader at Souza Barros brokerage in Sao Paulo.
Brazil's Central Bank has been buying dollars under a plan to boost foreign reserves.
Traders believe the monetary authority is trying to keep the real from growing stronger than 2.80 per dollar to protect export competitiveness.
The real gained 22 percent last year.
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