Jan. 31 (Bloomberg) -- The Bovespa stock index posted its best start to a year since 2006 as Gafisa SA surged on speculation that the Brazilian homebuilder will be sold and as optimism grew that Europe is closer to solving its debt crisis.
Gafisa rose the most on the gauge after newsletter Relatorio Reservado said the company will be sold to a group of U.S. investors. Iron-ore producer Vale SA contributed the most to the index’s advance after saying it got an injunction blocking a court decision related to unpaid taxes on profits at its overseas units. Financial shares tumbled after Banco Bradesco SA reported earnings that missed estimates.
The Bovespa rose 0.5 percent to 63,072.31 at the close of trading in Sao Paulo. Brazil’s benchmark stock index jumped 11 percent this month. Forty-one stocks gained on the gauge today, while 25 fell. The real strengthened 0.1 percent to 1.7468 per U.S. dollar.
“Investors seem very positive about the outlook for Brazilian stocks, with a bit more optimism about the problems in Europe, so the Bovespa keeps gaining,” Joao Pedro Brugger, who helps oversee 80 million reais ($46 million) at Leme Investimentos in Florianopolis, Brazil, said by phone today.
European Union leaders yesterday agreed on a fiscal- discipline treaty that allows for sanctions on high-deficit states and requires members to enact laws to limit budget shortfalls. Greece aims to complete discussions with bondholders by the end of this week, Prime Minister Lucas Papademos said.
Gafisa surged 6 percent to 4.77 reais after earlier jumping as much as 9.8 percent. The homebuilder may announce a deal with a group of U.S. investors as soon as next week, Relatorio Reservado reported, citing one unidentified person who works at the homebuilder.
An official at an external press relations firm representing Gafisa, who asked not to be identified in accordance with company policy, said the company doesn’t comment on market rumors.
Vale added 2.5 percent to 42.69 reais.
Banco Bradesco SA sank 3.1 percent to 31.40 reais. Brazil’s second-biggest bank by market value said adjusted net income, which excludes one-time items, rose 3.2 percent to 2.77 billion reais in the fourth quarter from a year earlier. That missed the 2.88 billion-real average estimate of eight analysts surveyed by Bloomberg.
Banco Santander Brasil SA, the Brazilian unit of Spain’s biggest bank, dropped 1.4 percent to 16.20 reais. Itau Unibanco Holding SA, Latin America’s biggest bank by market value, declined 1.1 percent to 35.12 reais. The MSCI Brazil/Financials Index slid 1 percent, the worst performer among 10 industry groups.
Brazil Industrial Output
Brazil’s industrial production in December rose at the fastest pace in seven months, as a weaker currency and falling interest rates help domestic manufacturers in Latin America’s biggest economy.
Output increased 0.9 percent in December, compared with the median forecast for a 1 percent rise among 39 economists surveyed by Bloomberg. The December reading was the biggest jump since May 2011, when output rose 1.2 percent.
The Bovespa 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. Brazil’s benchmark equity gauge sank 18 percent in 2011.
Traders moved 8.8 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: Glenn J. Kalinoski, Brendan Walsh
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