Brazil Stocks Rise on Commodities, Rate Outlook; Mexico Gains

By James Attwood

Sept. 3 (Bloomberg) -- Brazilian stocks rose for the first time in six days after the central bank signaled it will keep interest rates at a record low for the rest of this year and a rally in China equities fuelled gains for commodity producers.

Vale SA rose the most in a week after saying it’s restarting idled mines on demand from Japanese and European steelmakers. Petroleo Brasileiro SA climbed along with oil on speculation China will lead a rebound in fuel consumption. Rossi Residencial SA and Lojas Renner SA led gains for homebuilders and retailers on the prospect that lower borrowing costs will boost consumer demand as the economy recovers.

“All the leading indicators are still positive,” said Roberto Lampl, fund manager for ING Investment Management in The Hague, which oversees about $12 billion in emerging-market assets. “Those who missed the rally are starting to add on weakness. The trend that we’ve seen from the beginning of the year hasn’t broken.”

Brazil’s Bovespa index added 0.7 percent to 55,743.64 at 9:42 a.m. New York time, after tumbling 4.1 percent in the previous five days. Global stocks and commodity prices rallied after equities in China, the world’s largest industrial-metals consumer, advanced the most in six months. Mexico’s Bolsa gained 1.1 percent. The MSCI Emerging Markets Index added 1.4 percent.

Brazilian policy makers voted unanimously to keep the benchmark rate at 8.75 percent, matching the forecast of 49 of 50 analysts surveyed by Bloomberg. The current rate is “consistent” with a “benign” inflationary outlook and economic recovery, the board, led by President Henrique Meirelles, said a statement.

Retailers Gain

Rossi, which plunged 5.4 percent yesterday after announcing plans to sell shares, gained 1.1 percent to 10.98 reais. Renner rose 1 percent to 29.25 reais.

Cia. Brasileira de Distribuicao Grupo Pao de Acucar, Brazil’s largest retailer, rose 0.8 percent to 46.31 reais after saying it may save as much as 75 million reais ($40 million) in 2009 because of a change in the terms of its financial agreement with Itau Unibanco Holding SA.

Vale, the world’s largest iron ore exporter, added 1.5 percent to 32.67 reais. Demand outside of China is reviving, with Japanese mills making a “very fast” recovery, Jose Carlos Martins, executive director ferrous at the Brazilian company, said today. Chinese demand is “good,” he said.

“We’ve spoken to many firms and they’ve indicated that the worst is behind them. They’re starting to invest, they’re positive on growth expectations in various countries,” Lampl said.

Petrobras, Brazil’s state-controlled oil company, advanced 1.1 percent to 32.5 reais as oil rose to $69 a barrel in New York.

Most of the six industrial metals traded on the LME advanced, with lead posting the biggest gain as it climbed to the highest since July. Prices rose as a report showed that claims for jobless benefits in the U.S. fell last week.

The Bovespa has jumped 48 percent in 2009 on speculation a rebound in commodity prices and record-low rates will bolster growth in Latin America’s largest economy.

To contact the reporter on this story: Alexander Ragir in Rio de Janeiro at aragir@bloomberg.net

Last Updated: September 3, 2009 09:55 EDT

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