RIO DE JANEIRO, Nov 7 (Reuters) - Shares of Brazil's state-run oil firm Petrobras erased early gains on Friday to drop around 2 percent despite an increase in domestic fuel prices.
Petroleo Brasileiro SA, as the firm is formally known, announced late on Thursday that it will raise gasoline prices 3 percent and diesel 5 percent at the refinery gate as of midnight (0200 GMT) on Friday.
Analysts considered the increase insufficient to make up for recent losses in Petrobras' refining division, which is often forced to import fuels and sell them at a loss in the domestic market. Investors expected gasoline prices to rise at least 5 percent.
Petrobras preferred shares initially gained more than 1 percent on the Sao Paulo stock exchange. They quickly erased those gains to drop 2.35 percent at 10:35 a.m. local time (1235 GMT). (Reporting by Walter Brandimarte Editing by W Simon)