Bloomberg News

Brazilian Stocks Pare Monthly Decline on Global Liquidity Moves

December 01, 2011

Nov. 30 (Bloomberg) -- The Bovespa index jumped, paring its decline for the month, as central banks worldwide moved to shore up liquidity while speculation mounted that Brazil may employ a longer cycle of interest-rate cuts.

Petroleo Brasileiro SA gained after crude futures reversed losses and the state-controlled producer said it found “good- quality” oil in the Santos Basin. Gol Linhas Aereas Inteligentes SA, Brazil’s second-biggest airline by market value, paced advances for companies that depend on domestic demand.

The Bovespa rose 2.8 percent to 56,874.98 at the close in Sao Paulo. Brazil’s benchmark equity gauge fell 2.5 percent in November, completing its seventh monthly drop in eight. The real jumped 2 percent to 1.8085 per dollar today. Commodities and global stocks rallied after the Federal Reserve and five central banks lowered interest rates on dollar swaps and China cut the reserve ratio for its lenders.

“The impact is very positive because China is one of the main engines for Brazil,” said Fernando Goes, an analyst at Sao Paulo-based brokerage Octo Investimentos SA.

The central banks of the U.S., the euro region, Canada, the U.K., Japan and Switzerland agreed to cut the cost of providing dollar funding via swap agreements, the Federal Reserve said in a statement. They also agreed to make other currencies available as needed. China will cut the reserve requirement ratio for banks by 0.5 percentage point, according to a statement on the central bank’s website today.

Standard & Poor’s GSCI index of 24 raw materials increased 0.7 percent.

Rate Futures

Petrobras advanced 3 percent to 22.05 reais.

In Brazil’s interest-rate futures market, the yield on the contract due in January 2013 tumbled seven basis points, or 0.07 percentage point, to 9.61 percent. Central bank policy makers meet today to decide on borrowing costs after cutting the benchmark Selic twice since August to 11.5 percent.

Gol gained 7.1 percent to 13.50 reais.

The Bovespa entered a bull market in October after gaining 22 percent from a two-year low on Aug. 8 as Brazil’s interest- rate cuts and speculation Europe was working toward solving its debt crisis buoyed demand for equities. Since then, the index has pared its advance to 17 percent.

Brazil’s benchmark stock gauge trades at 9.9 times analysts’ earnings estimates, in line with the ratio for MSCI Inc.’s measure of 21 developing nations’ equities, weekly data compiled by Bloomberg show.

Traders moved 9.9 billion reais in stocks in Sao Paulo today, data compiled by Bloomberg show. That compares with a daily average this year of 6.52 billion reais through Nov. 24, according to data from the exchange.

--Editor: Marie-France Han

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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