Bloomberg News

Bovespa Advances as Europe Optimism Lifts Producers; Gol Jumps

November 04, 2011

Nov. 3 (Bloomberg) -- The Bovespa index rose for the first session in three as prospects for a Greek bailout and the European Central Bank’s unexpected interest-rate cut lifted the prices of Brazil’s commodity exports.

State-controlled oil producer Petroleo Brasileiro SA and miner Vale SA, the index’s heaviest-weighted companies, both gained more than 3 percent as crude and metals prices rose. Gol Linhas Aereas Inteligentes SA, Brazil’s second-biggest airline by market value, surged the most in almost three months after Morgan Stanley raised its stock recommendation.

The Bovespa rose 1.5 percent to 58,196.30 at the close in Sao Paulo. Forty-nine stocks climbed on the index, while 13 fell. The real strengthened 0.4 percent to 1.7376 per dollar.

“It shows that the European Central Bank may adopt a looser monetary policy, perhaps with some stimulus package for the region,” said Joao Pedro Brugger, who helps oversee 70 million reais ($40.2 million) at Leme Investimentos in Florianopolis, Brazil. “The market will remain focused on Europe’s rate cut and the unfolding situation in Greece.”

Commodities and global stocks rose as Greece moved closer to accepting a bailout and the ECB cut interest rates to bolster economies reeling from the debt crisis. Crude futures increased 1.7 percent in New York while the Bloomberg Base Metals 3-Month Price Commodity Index rose 0.7 percent.

Petrobras jumped 3.7 percent to 21.92 reais as Vale, the largest iron-ore producer in the world, advanced 3.2 percent to 41.70 reais.

Gol Surges

Gol gained 8.5 percent to 14.21 reais after being raised to “overweight” from “underweight” at Morgan Stanley.

The Bovespa entered a bull market last week after gaining 22 percent from a two-year low on Aug. 8 as cheap valuations and declining interest rates lured investors amid improving prospects for a solution to Europe’s debt crisis. Since then the index has pared its advance to 20 percent. The Bovespa dropped Nov. 1 as concern mounted that Brazil’s economy may falter after industrial production fell more than forecast and commodities slid.

Brazil’s benchmark trades at 10.7 times analysts’ earnings estimates, compared to a ratio of 10.5 for MSCI Inc.’s gauge of 21 developing nations’ equities, weekly data compiled by Bloomberg show.

Traders moved 6.7 billion reais in stocks in Sao Paulo today, data compiled by Bloomberg show. That compares to a daily average this year of 6.56 billion reais through Oct. 26, according to data from the exchange.

--Editors: Richard Richtmyer, Glenn J. Kalinoski

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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