Bloomberg News

Bovespa Index Futures Rise as Europe Optimism Lifts Petrobras

October 21, 2011

Oct. 21 (Bloomberg) -- Bovespa futures rose, indicating the stock index may pare its fourth weekly decline in five, as prospects for a deal to contain Europe’s debt crisis lifted commodity prices.

Petroleo Brasileiro SA, Brazil’s state-controlled oil company, gained in Frankfurt trading, following crude prices higher. LLX Logistica SA, the port developer controlled by billionaire Eike Batista, may move after saying it signed a rental agreement with NKT Flexibles I/S for its Acu port in Rio de Janeiro state.

Bovespa futures climbed 0.8 percent to 54,985 at 10:25 a.m. in Sao Paulo. The real weakened 0.4 percent to 1.7886 per dollar. Brazil’s benchmark equity gauge fell yesterday as traders pared wagers for further interest-rate cuts in Brazil and commodities slipped. The measure has fallen 1.9 percent since Oct. 14.

“It does look like Germany and France have agreed over the main points of a plan to deal with Europe’s debt crisis,” analysts at Sao Paulo-based equity advisory firm Empiricus Research wrote in a note to clients today.

European stocks and commodities advanced as regional finance ministers meet in Brussels today to lay the groundwork for an Oct. 23 gathering of government leaders that had been the deadline for a solution to the debt crisis. Another summit was scheduled for Oct. 26 yesterday after Germany and France said the European Union needs more time to seal a “global and ambitious” accord.

The Standard & Poor’s GSCI index of 24 raw materials rose 1.2 percent.

Bear Market

The Bovespa entered a bear market in July after plunging 20 percent from its 2010 bull-market peak. The measure since extended that drop to 26 percent through yesterday and trades at 9.7 times analysts’ earnings estimates, weekly data compiled by Bloomberg show. That compares to a ratio of 10 for MSCI Inc.’s gauge of 21 developing nations’ equities.

Traders moved 5.38 billion reais ($3.02 billion) in stocks in Sao Paulo yesterday, 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.

--Editors: Richard Richtmyer, Brendan Walsh

To contact the reporter on this story: Alexander Cuadros in Sao Paulo at acuadros@bloomberg.net

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


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