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Dec. 6 (Bloomberg) -- The Bovespa stock index advanced to a four-month high on speculation Brazil will act to shore up growth after a report showed Latin America’s biggest economy stalled in the third quarter.
Cia. Hering, Brazil’s second-biggest clothing retailer, gained the most in seven weeks as yields on interest-rate futures contracts declined. Banco do Brasil SA rose after saying it isn’t planning a capital increase. Oil producer Petroleo Brasileiro SA followed crude prices higher.
Brazil’s benchmark equity index gained 1.1 percent to 59,536.16 at the close of trading in Sao Paulo after earlier falling as much as 0.7 percent. Fifty-six stocks rose on the gauge, while 12 tumbled. The real weakened 0.3 percent to 1.7915 per dollar.
Gross domestic product in Brazil failed to grow from the previous three months for the first time since the first quarter of 2009, according to the national statistics agency.
“GDP numbers were weaker than expected, and the government will probably keep trying to, at least, limit this slowing trend,” Felipe Casotti, who helps manage 1.2 billion reais ($670 million) at Maxima Asset Management, said by phone from Rio de Janeiro.
Policy makers last week reduced levies on home appliances, staple foods, consumer credit and foreign purchases of stocks and corporate bonds tied to infrastructure in an effort to safeguard Brazil from the spreading European debt crisis.
Tighter credit, higher borrowing costs and budget cuts curbed demand, reducing Brazil’s annual rate of growth to 2.1 percent in the third quarter, less than the 2.4 percent median estimate of 44 economists surveyed by Bloomberg.
In the interest-rate futures market, yields on most contracts fell after the GDP report was released. Yields on the contract due in January 2013 fell two basis points, or 0.02 percentage point, to 9.81 percent.
Cia. Hering added 4.4 percent to 38.90 reais.
Finance Minister Guido Mantega lowered the government’s forecast for 2011 GDP growth to 3.2 percent from 3.8 percent after the third-quarter figures were released.
Brazil’s economy is in a “sustained cycle of expansion” and the third-quarter figures show it’s growing at a pace consistant with the 2012 inflation target, central bank President Alexandre Tombini said.
Banco do Brasil SA, Latin America’s biggest bank by assets, gained 1 percent to 24.41 reais after saying in a regulatory filing that it hasn’t received any request from controlling shareholder to study a possible capital increase. O Globo reported yesterday that Brazil’s government, which controls the bank, was studying an increase in the lender’s capital. The Rio de Janeiro-based newspaper didn’t say where it got the information.
Petrobras, as Petroleo Brasileiro is known, rose 1.5 percent to 23.32 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. The gauge is still down 14 percent this year on concern flagging global commodity demand and quickening inflation will hurt corporate earnings growth.
Brazil’s benchmark equity index trades at 10.4 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 5.02 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 Dec. 1, according to data from the exchange.
--Editors: Richard Richtmyer, Brendan Walsh
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