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Bovespa Posts World’s Biggest Gain as Vale Jumps on Metals Rally

March 13, 2012

The Bovespa index rose the most in four months as Vale SA (VALE5) followed metals prices higher after better-than-expected German investor confidence and U.S. retail sales spurred optimism the global economy is strengthening.

Vale contributed the most to the gauge’s advance following speculation that policy makers in China, the company’s top export market, will act to spur growth. Even Construtora e Incorporadora SA rose after the builder’s annual sales exceeded analyst estimates. Sixty-five stocks rose, while four fell.

Brazil’s benchmark equity gauge added 3 percent to 68,394.33 at the close of trading in Sao Paulo. The surge was the steepest one-day advance since Oct. 27 and led gains among major global equity indexes after reports showed German investor confidence increased more than analysts forecast and U.S. retail sales grew at the fastest pace in five months.

“The confidence report in Germany is positive for stocks, as it at least gives the impression that things over there are not so bad, despite the problems we see in the region,” said Fausto Gouveia, who helps manage 380 million reais ($212 million) at Legan Administracao de Recursos.

The ZEW Center for European Economic Research in Mannheim, Germany, said its index of investor and analyst expectations, which seeks to predict economic developments six months in advance, rose to 22.3 from 5.4 in February. Economists had forecast a gain to 10, according to the median of 36 estimates compiled by Bloomberg.

Brazil’s real gained 0.3 percent to 1.7922 per dollar, erasing earlier losses of as much as 1.6 percent.

The Bloomberg Base Metals 3-Month Price Commodity Index (CMDIBAS3) climbed 1.5 percent. The MSCI/Brazil Materials index was the best performer among 10 industry groups, gaining the most since May 2010.

China Growth Outlook

Deutsche Bank AG and Nomura Holdings Inc. lifted their estimates for China’s economic expansion. The central bank may cut interest rates as soon as this month, Nomura analysts Zhang Zhiwei and Wendy Chen wrote in a note dated yesterday.

Even advanced 3.7 percent to 7.80 reais. The company reported annual sales of 1.9 billion reais, above the 1.8 billion reais average estimate of six analysts in a Bloomberg survey. Vale rose 5.4 percent to 41.59 reais, halting a six-day slide.

The Bovespa has advanced 21 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 11.1 times analysts’ earnings estimates, which compares with a 10.9 ratio for MSCI Inc.’s measure of 21 developing nations’ equities, weekly data compiled by Bloomberg show.

Traders moved 8.33 billion reais in stocks in Sao Paulo today, data compiled by Bloomberg show. That compares with a daily average of 7.21 billion reais this year through March 8, according to data from the exchange.

To contact the reporter on this story: Ney Hayashi in Sao Paulo at

To contact the editor responsible for this story: David Papadopoulos in New York at

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