Oct. 5 (Bloomberg) -- The Bovespa index rose for the first day in four as cheap valuations and prospects for lower interest rates lured investors, while U.S. economic data that topped estimates improved the outlook for commodity demand.
Miner Vale SA and pulp producer Fibria Celulose SA followed raw-material prices higher. Airline Tam SA led advances for companies that depend on domestic demand as traders wagered on deeper interest-rate cuts. The index’s advance was limited by a drop in state-controlled oil producer Petroleo Brasileiro SA on concern workers will strike for higher wages.
The Bovespa gained 0.6 percent to 51,013.85 at 4:15 p.m. New York time, erasing an earlier decline of as much as 0.9 percent in the last hour of trading. Forty-two stocks rose on the index while 24 fell. The real strengthened 1.5 percent to 1.8313 per dollar.
“Investors are looking for bargains,” said Pedro Galdi, chief strategist at Sao Paulo-based brokerage SLW Corretora. “U.S. payrolls came in good. There’s no big news. The market is very volatile.”
Brazil’s benchmark equity gauge trades at 8.8 times analysts’ earnings estimates, data compiled by Bloomberg show. That compares to a ratio of 13 at the end of last year.
Yields on interest-rate futures contracts tumbled, indicating traders expect the central bank to make deeper cuts in borrowing costs. The yield on the contract due in January 2013 fell five basis points, or 0.05 percentage point, to 10.22 percent.
The Standard & Poor’s GSCI index of 24 raw materials gained 2.8 percent.
Global Stocks, Commodities
Global stocks rallied and commodities snapped a three-day slump as U.S. economic data topped estimates and on optimism European leaders will recapitalize banks. Reports depicting faster-than-forecast growth in U.S. payrolls and service industries and rising fuel demand tempered concern the economic recovery was in jeopardy. European Union officials are working on plans to boost bank capital to contain the debt crisis, the International Monetary Fund said.
Vale SA, the world’s largest iron-ore producer, gained 2.3 percent to 38.70 reais while Fibria, the largest producer of pulp in the world, rallied 6.3 percent to 14.62 reais. Tam SA, Brazil’s biggest airline by market value, jumped 7 percent to 28.50 reais.
Petrobras slid 1.8 percent to 18.21 reais, the lowest close since December 2008. Workers plan to demand a 10 percent raise over inflation and better work and security conditions, the United Federation of Oil Workers said in an e-mailed statement yesterday after the market closed.
The Bovespa entered a bear market in July after plunging 20 percent from its bull-market peak last year. The measure has since extended that drop to 30 percent.
Traders moved 5.89 billion reais ($3.2 billion) in stocks in Sao Paulo today, data compiled by Bloomberg show. That compares to a daily average this year of 6.53 billion reais through Sept. 14, according to data from the exchange.
--Editors: Richard Richtmyer, Glenn J. Kalinoski
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