The Bovespa index rose for the first time in four days on speculation Brazil’s central bank will cut the target lending rate further to bolster growth and as an increase in U.S. consumer confidence spurred optimism about the outlook for the world’s largest economy.
Homebuilder Cyrela Brazil Realty SA was the best performer on the MSCI Brazil/Consumer Discretionary Index, which rose the most among 10 industry groups. BM&FBovespa SA (BVMF3), the operator of Latin America’s largest securities exchange, jumped after saying profit in the first quarter increased on higher trading volumes.
In the U.S., the Thomson Reuters/University of Michigan preliminary index of consumer sentiment climbed to 77.8, the highest since January 2008. Yields on most interest-rate futures contracts in Brazil fell after central bank President Alexandre Tombini said a boost in inflation won’t last.
“The consumer confidence number in the U.S. was the first positive piece of news in a while, and helped markets to recover,” Marcio Cardoso, a partner at Titulo Corretora de Valores, said by phone from Sao Paulo. “Tombini’s remarks yesterday were taken by investors as a sign that interest rates may fall more than expected. If the external outlook doesn’t get in the way, we may see Brazil growing a bit faster in the second half of the year.”
Brazil’s benchmark equity gauge gained 0.5 percent to 60,029.69 at 1:40 p.m. in Sao Paulo. Forty-three stocks gained on the gauge, while 23 fell. Yields on the Brazilian interest- rate futures contract due in January 2014 fell six basis points, or 0.06 percentage point, to 8.4 percent.
Consumer price increases in Brazil will ease in the next three months and remain below the 0.64 percent rise posted in April, which was more than the policy makers expected, Tombini told reporters in Rio de Janeiro yesterday.
Cyrela advanced 2.9 percent to 15.01 reais.
BM&FBovespa rose 1.5 percent to 10.28 reais as adjusted net income increased to 409.2 million reais ($210.8 million) in the first quarter, from 384.2 million reais a year earlier.
The Bovespa (IBOV) has gained 5.7 percent in 2012, buoyed by local interest-rate cuts, signs of expansion in the U.S. and optimism that Europe may be closer to resolving its sovereign-debt crisis. The measure has fallen 12 percent since this year’s high on March 13 on rekindled concern about Europe and on speculation the slowdown in China, Brazil’s biggest trading partner, may be deeper than expected.
The measure trades at 9.9 times analysts’ earnings estimates, in line with the 10.2 ratio for MSCI Inc.’s measure of 21 developing nations’ equities, data compiled by Bloomberg show. Trading volume was 5.9 billion reais in stocks in Sao Paulo yesterday, according to data from the exchange. That compares with a daily average of 7.2 billion reais this year through May 10.
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