Bloomberg News

Most Brazilian Stocks Advance as Weaker Real Boosts Exporters

September 12, 2011

Sept. 12 (Bloomberg) -- Most Brazilian equities rose and the Bovespa stock index pared an earlier drop of as much as 2.6 percent after the real fell to its lowest level in almost nine months, boosting the outlook for exporters.

Pulp and paper exporters Fibria Celulose SA and Klabin SA advanced. Embraer SA, the world’s fourth-largest planemaker, gained the most in one week. Itau Unibanco Holding SA fell as European banks tumbled on concern Moody’s Investors Service may cut ratings on French lenders.

The Bovespa fell 0.2 percent to 55,685.47 at 4:15 p.m. New York time. The index pared losses in the last hour of trading, tracking stocks in the U.S., after the Financial Times reported Italy approached China about selling “significant” quantities of bonds and investments in some companies. The newspaper cited Italian officials it didn’t identify.

Thirty-five stocks advanced on the index, while 31 fell. The real weakened 1.7 percent to 1.7026 per U.S. dollar, the lowest since December.

“Stocks that gain with a weaker real helped to boost the Bovespa today,” Fausto Gouveia, who helps manage about 250 million reais ($146 million) at Legan Administracao de Recursos, said in a telephone interview from Sao Paulo. “This would surely be a big help to Italy,” Gouveia said about the Italian news.

Embraer rose 3.7 percent to 10.2 reais. Fibria gained 3.3 percent to 15.89 reais. Klabin jumped 4.3 percent to 5.39 reais.

The real tumbled to the weakest level since December on concern a possible default from Greece may curb capital inflows to emerging markets.

French Banks

BNP Paribas SA, Societe Generale SA and Credit Agricole SA plunged at least 11 percent in Paris on a possible ratings cut by Moody’s. France’s three largest banks by market value may have their credit ratings cut as early as this week because of their Greek holdings, two people with knowledge of the matter said.

Brazilian banks could be affected by problems faced by European banks, even though they don’t have a relevant exposure to Greek bonds, if a sovereign default freezes global credit markets, Alvaro Bandeira, a director at Ativa Corretora brokerage, said in a telephone interview from Rio de Janeiro.

Itau fell 1.8 percent to 28.29 reais. The MSCI Brazil/Financials Index slumped 3.2 percent, the second-worst performer among 10 industry groups.

The Bovespa entered a bear market on July 27 after plunging 20 percent from its bull-market peak in November. The measure extended that drop to 24 percent through Sept. 9.

Brazil’s benchmark index trades at 9.5 times analysts’ earnings estimates, according to weekly data compiled by Bloomberg. That compares to a ratio of 11.5 for the Shanghai Composite Index, 5.7 for Russia’s Micex and 14.2 for India’s Sensex.

Traders moved 5.37 billion reais in stocks in Sao Paulo on Sept. 9, data compiled by Bloomberg show. That compares to a daily average this year of 6.55 billion reais through Sept. 6, according to data from the exchange.

--With assistance from Tony Czuczka in Berlin. Editors: Marie- France Han, Glenn J. Kalinoski

To contact the reporter on this story: Ney Hayashi in Sao Paulo at ncruz4@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos in New York at papadopoulous@bloomberg.net


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