Oct. 14 (Bloomberg) -- The Bovespa stock index posted its biggest weekly gain in more than two years as a commodities rally sparked by optimism that European leaders will resolve the region’s sovereign debt crisis boosted the outlook for Brazil’s biggest companies.
Klabin SA, Latin America’s biggest paper maker, rose to a four-month high after saying it plans to buy back as much as 10 percent of its publicly traded shares. Vale SA, the world’s largest iron-ore producer, had the biggest weekly gain in 15 months.
The Bovespa climbed 0.8 percent to 55,030.45 at the close of trading in Sao Paulo. That pushed the weekly advance to 7.4 percent, the steepest rise since May 2009. Forty-eight stocks gained on the gauge, while 17 fell. The real strengthened 1.2 percent to 1.7302 per U.S. dollar.
“There are signs that the global economy may not be doing as badly as it looked before, and Europe seems to be getting closer to solving its problems,” Dany Rappaport, who helps manage about 160 million reais ($92 million) at Investport, said by phone from Sao Paulo.
Group of 20 finance ministers and central bankers meet in Paris today and tomorrow to discuss the euro area’s debt crisis. Officials are outlining a rescue plan that may include deeper investor losses on Greek bonds, higher bank capital levels and increased firepower for bailouts and the International Monetary Fund.
In the U.S., retail sales rose more than forecast in September, easing concern slumping confidence and scant hiring will derail the biggest part of the economy.
The Standard & Poor’s GSCI Index of 24 raw materials advanced 2.4 percent today and rose 5.2 percent since Oct. 7, the biggest weekly gain since December.
Vale increased 0.6 percent to 41.18 reais. It jumped 7.5 percent this week, the most since July 2010. Klabin gained 2.2 percent to 5.92 reais and had a weekly advance of 6.1 percent.
Usinas Siderurgicas de Minas Gerais SA led steelmakers higher, rising 3 percent to 11.14 reais. It gained 7.1 percent this week. Cia. Siderurgica Nacional SA climbed 1.4 percent to 14.79 reais, pushing its weekly advance to 7.8 percent.
The Bovespa earlier dropped as much as 0.3 percent on speculation borrowing costs in Brazil may not fall as much as previously expected, dimming the outlook for companies that depend on credit growth.
Yields on most interest-rate futures contracts rose. The yields on the contract maturing in January 2013, the most traded today in Sao Paulo, climbed 10 basis points, or 0.1 percentage point, to 10.55 percent.
“The market is still very volatile, and we don’t see any real trend,” said Eduardo Favrin, who oversees about $3.2 billion as head of equities at HSBC Global Asset Management’s Brazil unit in Sao Paulo. “We’re still reacting on a daily basis depending on the news.”
Brazil’s benchmark equity gauge entered a bear market in July after plunging 20 percent from its 2010 bull-market peak. The measure has since extended that drop to 25 percent and trades at 8.9 times analysts’ earnings estimates, weekly data compiled by Bloomberg show. That compares to a ratio of 9.5 for MSCI Inc.’s gauge of 21 developing nations’ equities.
Traders moved 5.58 billion reais in stocks in Sao Paulo today, data compiled by Bloomberg show. That compares to a daily average this year of 6.58 billion reais through Oct. 13, according to data from the exchange.
--With assistance from Leon Lazaroff in New York. Editors: Richard Richtmyer, Glenn J. Kalinoski
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