Bovespa Extends Longest Rally in Three Months on Rate Bets

The Bovespa stock index rose for a fifth day, the longest streak in three months, as traders pared bets for higher interest rates and rising commodity prices boosted the outlook for Brazilian producers.

B2W Cia. Global do Varejo, Brazil’s largest online retailer, climbed as much as 2.1 percent. PDG Realty SA Empreendimentos & Participacoes, Brazil’s biggest homebuilder by revenue, led advances by real estate companies. LLX Logistica SA and MMX Mineracao & Metalicos SA, the logistics and mining companies controlled by billionaire Eike Batista, rose as metals prices increased. Cosan SA Industria e Comercio, which shares control of the world’s biggest sugar-cane processor, followed sugar prices higher.

The Bovespa gained 0.3 percent to 69,485.10 at 9:32 a.m. New York time and reached the highest intraday level since Jan. 21. Fifty-two stocks rose on the index while 14 fell. The gauge is little changed for the year, dropping 0.1 percent through last week as declines for homebuilders and banks offset gains in oil producer Petroleo Brasileiro SA.

“It seems risk appetite is increasing,” Kelly Trentin, head analyst at Sao Paulo-based brokerage Spinelli Corretora, said in a telephone interview today. “The U.S. economy is showing strong growth. Here in the local market, the central bank sees inflation under control and less need to raise interest rates. These two factors have returned investor confidence in the short term.”

Higher Prices

Traders pared bets for higher borrowing costs even after a central bank survey published today showed that economists raised their 2011 and 2012 inflation forecasts. Brazil’s FIPE Consumer Price Index rose 0.35 percent in March, compared with a median estimate of 0.4 percent in a Bloomberg survey of 15 economists.

B2W gained 1.4 percent to 23.00 reais.

PDG gained 1.8 percent to 9.62 reais.

Telemar Norte Leste SA led gains for phone companies. Telemar, Brazil’s biggest fixed-line phone company, rose 2.5 percent to 58.40 reais.

Commodities rose to a two-year high on evidence economic growth is being sustained. The Standard & Poor’s GSCI index of 24 raw materials increased 0.4 percent.

LLX gained 2.5 percent to 5.38 reais, reaching the highest intraday price since December. MMX advanced 0.7 percent to 10.15 reais. Cosan climbed 1.2 percent to 26.40 reais.

The real weakened 0.4 percent to 1.6136 per dollar today. Brazil is considering a new round of capital controls after taxes on foreign investment in local markets failed to stop the currency from rallying the most in more than 20 months last week, a government official briefed on the plan said.

New Currency Measures

Finance Minister Guido Mantega will discuss possible measures in meetings with government officials, including central bank President Alexandre Tombini, in coming days, said the ministry official, who asked not to be named because the talks aren’t public. Mantega is seeking ways to reduce foreign capital from going into local markets without hurting infrastructure and industrial investments, the person said.

Investors pulled 2.86 billion reais from Latin America’s biggest equity market this year through March 30, data from the Sao Paulo exchange show.

The index’s advance was limited as Banco do Brasil SA led declines for financial stocks, falling 1.1 percent to 29.65 reais. Chief Executive Officer Aldemir Bendine said April 1 the lender, Latin America’s biggest by assets, may sell shares next year.

The Bovespa rose on April 1, completing the biggest weekly advance since February, after domestic industrial production grew more than forecast and U.S. unemployment fell to a two-year low. The index trades at 11.1 times analysts’ earnings estimates, according to weekly data compiled by Bloomberg. That compares to a ratio of 13.9 for the Shanghai Composite Index, 7.7 for Russia’s Micex, and 15.5 for India’s Sensex.