The Ibovespa snapped a three-day drop as iron-ore producer Vale SA (VALE5) followed commodities prices higher after an interest-rate increase in India bolstered confidence in emerging markets.
State-controlled oil producer Petroleo Brasileiro SA (PBR:US) and Vale contributed the most to the gauge’s advance. Dental benefits provider Odontoprev SA rose the most in a month as Grupo BTG Pactual recommended buying the stock.
The Ibovespa added 1.4 percent to 48,389.3 at 10:36 a.m. in Sao Paulo, as 71 of its 72 member stocks rose. The Standard & Poor’s GSCI index of 24 raw materials climbed 0.4 percent. The real appreciated 0.3 percent to 2.415 per dollar, rallying along with most other emerging-market currencies, after the Reserve Bank of India unexpectedly increased the repurchase rate to 8 percent from 7.75 percent to bolster the rupee.
“There has been a lot of concern about the emerging-market economies as the Federal Reserve is expected to cut stimulus measures as China’s growth slows down,” Alvaro Bandeira, a partner at Orama Asset Management, said by phone from Rio de Janeiro. “When central banks take action, investors get more confident.”
The MSCI Emerging Markets Index dropped the most in six months yesterday, to the lowest since August, on concern that the Fed’s expected reduction in stimulus will pare demand for developed-nation assets. In China, the economy will probably expand this year at the slowest pace since 1990, based on the median estimate in a Bloomberg News survey.
Vale advanced 1.9 percent to 29.09 reais in the biggest jump since Nov. 28 on a closing basis. Petrobras, as Petroleo Brasileiro is known, rose 1.9 percent to 15.39 reais. Odontoprev added 1 percent to 8.80 reais.
The Ibovespa (IBOV) has tumbled 14 percent from a bull-market high on Oct. 22 as inflation exceeded policy makers’ target for a third consecutive year and concern mounted that higher government spending will lead to a reduction in the country’s credit rating.
Trading volume of stocks in Sao Paulo was 5.61 billion reais yesterday, which compares with a daily average of 6.24 billion reais this month, according to data from the exchange.
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