Bloomberg News

Bovespa Index Advances as Commodities Surge Lifts Petrobras, MMX

February 27, 2012

Feb. 24 (Bloomberg) -- The Bovespa stock index rose, trimming a weekly loss, as higher commodities prices boosted the outlook for Brazil’s largest companies amid increased optimism about the global economy.

Mining company MMX Mineracao & Metalicos SA and oil producer Petroleo Brasileiro SA contributed the most to the index’s advance as metals and crude climbed. Petrobras, as the state oil company is known, also said the Tiro and Sidon areas, in Brazil’s Santos basin, are commercially viable. Wireless carrier Tim Participacoes SA gained after it forecast sales growth of more than 10 percent this year.

Brazil’s benchmark equity gauge added 0.2 percent to 65,942.73 at the close of trading in Sao Paulo, paring this week’s decline to 0.4 percent. Forty-three stocks gained on the measure today, while 26 fell. The real strengthened 0.2 percent today to 1.7100 per U.S. dollar.

“There’s a lot of liquidity in the world right now, and investors seem to be more willing to take on risk, which helps explain why commodities are gaining and why the Bovespa is doing so well,” Rogerio Freitas, a partner at hedge fund Teorica Investimentos, said by phone from Rio de Janeiro.

Oil advanced for a seventh day on signs of a global economic recovery and as escalating tension with Iran threatens crude supplies. The Bloomberg Base Metals 3-Month Price Commodity Index rose 1.3 percent.

In the U.S., the Thomson Reuters/University of Michigan final February index of consumer sentiment unexpectedly increased to a one-year high. Purchases of new homes also exceeded forecasts in January, data from the Commerce Department showed.

Petrobras, MMX

Petrobras gained 2.3 percent to 24.48 reais. MMX jumped 4.1 percent to 9.39 reais.

Tim added 2.7 percent to 10.44 reais.

Fibria Celulose SA, the world’s largest pulp producer, slumped 5 percent to 15.33 reais, and smaller rival Suzano Papel & Celulose SA dropped 1.9 percent to 8.26 reais. Both companies are preparing to sell shares, Valor Economico reported, without saying where it got the information. Fibria may raise as much as 2 billion reais ($1.17 billion) in a public offering in March, the Sao-Paulo based newspaper said.

Fibria said in an e-mailed statement it isn’t planning a share sale. Suzano said the company doesn’t comment on market rumors, according to a separate statement.

Telemar Plan

Units from Telemar Participacoes, Brazil’s telephone company that operates under the Oi brand, rose after the nation’s securities regulator, known as CVM, rejected complaints from minority shareholders against a restructuring plan, according to a statement from Telemar.

Telemar Norte Leste SA rose 2 percent to 42.17 reais. Tele Norte Leste Participacoes SA climbed 0.1 percent to 17.66 reais. Brasil Telecom SA slid 2.7 percent to 10.97 reais after earlier advancing as much as 2.8 percent.

Telemar Participacoes plans to merge the units into one entity that will trade under the name Oi SA. The company scheduled a shareholder meeting for Feb. 27 to vote on the proposal, according to a Jan. 26 filing.

The Bovespa has advanced 16 percent this year, after slumping 18 percent in 2011, buoyed by Brazil’s interest-rate cuts, signs of growth in the U.S. and renewed optimism Europe may be closer to solving its debt crisis. The gauge trades at 10.6 times analysts’ earnings estimates, compared with a 10.7 ratio for MSCI Inc.’s measure of 21 developing nations’ equities, weekly data compiled by Bloomberg show.

Traders moved 6.21 billion reais in stocks in Sao Paulo today, data compiled by Bloomberg show. That compares with a daily average of 6.97 billion reais this year through Feb. 13, according to data from the exchange.

--Editors: Glenn J. Kalinoski, Brendan Walsh

To contact the reporter on this story: Ney Hayashi in Sao Paulo at ncruz4@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos in New York at papadopoulos@bloomberg.net


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