June 28 (Bloomberg) -- The Bovespa stock index climbed the most in three weeks as Cia. Brasileira de Distribuicao Grupo Pao de Acucar rallied after saying it plans a joint venture with Carrefour SA, while a gain in commodities prices sent producers higher.
Grupo Pao de Acucar jumped the most in almost 19 months. Miner Vale SA and oil company Petroleo Brasileiro SA followed metals and crude prices higher. Banks including Banco Santander Brasil SA climbed after a report showed credit expanded at its fastest pace so far this year.
The Bovespa rose 1.2 percent to 61,953.22 at 1:58 p.m. New York time, the most intraday since June 3. Fifty stocks climbed on the index, while 17 fell. The real strengthened 1 percent to 1.5792 per U.S. dollar.
“Some producers, like Vale, are trading at very cheap prices when compared to foreign competitors, and are gaining today with higher commodity prices,” said Joao Pedro Brugger, who helps oversee 70 million reais ($44 million) at Leme Investimentos in Florianopolis, Brazil. “The possible Pao de Acucar deal with Carrefour also helped to send stocks higher, as it signals that the retail industry is heating up and is attracting the interest of many investors.”
Copper and oil prices rose amid optimism that the European debt crisis will be contained, boosting growth prospects. The UBS Bloomberg CMCI Index of 27 raw materials rose 1.5 percent, the most intraday in one month.
Vale gained 0.7 percent to 44.35 reais. Petrobras, as Petroleo Brasileiro is known, gained 0.7 percent to 23.24.
Pao de Acucar
Carrefour received a proposal backed by the Brazilian National Development Bank to merge its Brazilian assets with those of Grupo Pao de Acucar, according to a statement released today.
The combination was proposed by Gama, an investment fund managed by Banco BTG Pactual SA. Gama would receive a capital injection from the Brazilian National Development Bank of 2 billion euros ($2.9 billion) and debt financing for 500 million euros under the plan, and become a shareholder in the Boulogne- Billancourt, France-based company.
Grupo Pao de Acucar rose 11 percent to 72.31 reais, the most intraday since December 2009.
Banco Santander Brasil, the Brazilian unit of Spain’s biggest bank, rose 1.9 percent to 17.57 reais, leading gains by banks after a report showed credit in Brazil expanded in May at its fastest pace so far this year.
Total outstanding credit rose 1.6 percent in May from April, to 1.804 trillion reais, the central bank said in a report distributed today in Brasilia. That’s the quickest pace since December, when credit also expanded 1.6 percent. Total credit rose 20.4 percent from a year ago.
Brazil’s benchmark equity gauge has lost 16 percent from a November high through yesterday on concern quickening inflation may hurt domestic demand, while a slowdown in global economic growth could cut the appetite for commodities.
The Bovespa trades at 9.8 times analysts’ earnings estimates, the lowest since March 2009, according to weekly data compiled by Bloomberg. That compares to a ratio of 12.8 for the Shanghai Composite Index, 6.2 for Russia’s Micex and 14.9 for India’s Sensex.
Traders moved 4.7 billion reais ($3 billion) in stocks yesterday, data compiled by Bloomberg show. That compares to a daily average this year of 6.5 billion reais, according to data from the exchange.
Investors pulled 1.48 billion reais from Latin America’s largest equity market in the year through June 8, according to the exchange.
--Editors: Marie-France Han, Glenn J. Kalinoski
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