Jan. 6 (Bloomberg) -- The Bovespa stock index posted its biggest weekly gain in a month as lender Banco Bradesco SA led financial shares higher after a report showing Brazil’s 2011 inflation unexpectedly met the government’s target spurred bets on lower borrowing costs.
Bradesco, Brazil’s second-biggest bank by market value, rose to a six-month high as the MSCI/Brazil Financials index gained the most among 10 industry groups. Consumer-goods maker Hypermarcas SA surged the most in 20 months after O Estado de S. Paulo said Banco BTG Pactual SA is in talks to join a controlling block of shareholders. Homebuilder Brookfield Incorporacoes SA climbed after fourth-quarter sales jumped.
The Bovespa advanced 0.1 percent to 58,600.37 at the close of trading in Sao Paulo. Thirty-five stocks dropped on the index, while 31 climbed. The gauge rose 3.3 percent this week. The real weakened 0.7 percent to 1.8566 per U.S. dollar today, paring this week’s advance to 0.5 percent.
“When it comes to Brazil, the outlook is not bad as the economy slows a bit, but keeps growing, and inflation seems to be under control,” Leandro Martins, the head analyst at Sao Paulo-based brokerage Walpires SA, said in a telephone interview. Still, “the external outlook is still very uncertain, and that brings a lot of volatility to the market.”
Consumer prices in Brazil rose 6.5 percent in 2011, the national statistics agency said today in Rio de Janeiro, within the upper limit of the government’s 2.5 percent to 6.5 percent target range. The figure was lower than the median forecast of 6.56 percent among 35 economists surveyed by Bloomberg.
Yields on Brazilian interest-rate futures contracts fell for the first time in four days after the inflation report. Yields on the futures contract due in January 2013, the most traded today, dropped eight basis points, or 0.08 percentage point, to 10.07 percent.
Hypermarcas surged 9 percent to 10.25 reais, the steepest one-day increase since May 2010.
Brookfield gained 1.8 percent to 5.55 reais after earlier jumping as much as 5.7 percent. Brazil’s fourth-largest real- estate company by revenue said contracted sales rose 21 percent to 4.39 billion reais ($2.36 billion) in 2011, surpassing a yearly target.
Brazil’s benchmark equity gauge earlier fell as much as 0.3 percent as lower commodities prices dimmed the outlook for raw material producers. Vale SA, the world’s largest iron-ore producer, fell 0.8 percent to 39.46 reais. OGX Petroleo & Gas Participacoes SA, the oil company controlled by billionaire Eike Batista, slid 0.4 percent to 13.55 reais. The Standard & Poor’s GSCI index of 24 raw materials dropped as much as 0.4 percent.
The Bovespa has gained 20 percent from a two-year low on Aug. 8 as interest-rate cuts in Brazil and signs of progress in solving Europe’s debt crisis buoyed demand for equities. The gauge trades at 10 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 4.55 billion reais in stocks in Sao Paulo today, data compiled by Bloomberg show. That compares with a daily average of 6.49 billion reais in 2011, according to data from the exchange.
--Editors: Richard Richtmyer, Marie-France Han
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