Many analysts reckon it was an overdue correction after some feverish buying, particularly of Telebras, the state-controlled telecoms holding company whose shares account for 45% of the Bovespa index.

ECONOMIST: Rational anxiety in Brazil

No wonder, then, that officials were so jubilant over last month's successful privatisation of Telebras, Brazil's telecoms network, and not just because it should give the country a decent telephone system.

ECONOMIST: Brazil

Mr da Silva, meanwhile, seems to have squandered his chance, railing against the Telebras privatisation and making populist spending promises rather than encroaching on the centre ground dominated by his opponent.

ECONOMIST: Brazil prepares for Cardoso without coat-tails

His actions, he said, were all aimed at ensuring the strongest possible competition in the Telebras auction, so that the phone companies were sold at the highest possible price to competent operators.

ECONOMIST: Crossed lines in Brazil

Brazil hopes to turn its tardiness in privatising Telebras to advantage, by avoiding the mistakes made in countries such as Mexico and Argentina, which granted a seven-year monopoly to private telecoms operators.

ECONOMIST: A clear line from Brazil

Last month a team including Morgan Stanley and Salomon Brothers won the contract to arrange the sale of Telebras, Brazil's telecoms firm, by charging a mere 0.07% of the sale price (compared with fees of up to 1.5% on some past privatisation contracts).

ECONOMIST: Brazil��s investment banks