Meirelles dispels Brazil asset bubble talk-report

SAO PAULO, Nov 9 (Reuters) - Brazilian Central Bank President Henrique Meirelles said that despite the "unrestrained enthusiasm" that is driving some investors, it is too premature to assess that an asset bubble is forming in the nation's currency and stock markets, Valor Economico said on Monday. Meirelles suggested in an interview to the financial newspaper that, contrary to some countries where asset prices are rising amid an economic contraction, in Brazil gains have been mostly due to a recovery in economic activity. Brazil's stock market has soared over 70 percent percent so far in 2009, and its currency, the real has gained over 30 percent against the dollar this year. "When I hold talks with investors from all around the world, I sense a mood of unrestrained enthusiasm," Meirelles told Valor. He said the central bank has repeatedly warned over the risk of "herd behavior" in financial markets, Valor said. Concerns that a bubble is also forming in the commodities markets lack consistent evidence, Meirelles told the daily. Risk appetite has improved since late March amid signs that the steepest economic recession globally in almost seven decades was easing thanks to government policies to revive growth. The Brazilian economy, Latin America's largest, emerged from a short-lived six-month recession in the second quarter thanks to resilient consumer demand and government spending. Meirelles warned over possible liquidity shortages once central banks around the world begin to pull the hefty monetary stimuli of recent months, Valor said. He also reiterated that Brazil will continue to bulk up international reserves to cushion the economy against violent swings in the foreign exchange rate, Valor said. Meirelles suggested that annualized growth rates in Brazil, which are estimated to have hovered around 7 percent to 8 percent in the second and third quarters, might be "unsustainable," if analysts' forecasts for next year are used as reference, Valor reported. Growth rates might stabilize around 4.5 percent to 5 percent in 2010, he told the newspaper. To avert any inflationary pressures, business managers should start investing now instead of waiting for more signals that growth in the economy will accelerate, Meirelles told Valor. "It is an alert for entrepreneurs, rush to invest, do not wait to catch up," Meirelles told Valor. (Reporting by Guillermo Parra-Bernal, editing by W Simon) Keywords: BRAZIL ECONOMY/MEIRELLES ([e-mail]; [phone]; Reuters Messaging: [e-mail]) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved.

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