June 4 (Bloomberg) -- Brazilian stocks climbed the most in almost three weeks as rising oil prices boosted Petroleo Brasileiro SA and investors increased bets that policy makers will further cut interest rates.

Petrobras, Brazil’s state-controlled oil company, rose for the first time in three days after oil prices added more than 4 percent. Cyrela Brazil Realty SA Empreendimentos & Participacoes climbed as rate futures dropped. Tim Participacoes SA led gains for phone stocks as investors took advantage of price declines to buy companies with steady and predictable revenue.

“Oil at this price would make Petrobras pre-salt exploration very viable and, in economic terms, this would be very good for Brazil,” said Guilherme Sand, who helps manage the equivalent of $250 million at Solidus Brokerage in Porto Alegre, Brazil. “If commodities stay strong it’s good for emerging markets.”

The Bovespa rose 2.6 percent to 53,463.90, the biggest gain since May 18. The measure tumbled 3.5 percent yesterday as commodity prices dropped and analysts downgraded the country’s biggest steelmakers. The index is up 42 percent for the year.

In other Latin American markets, Mexico’s Bolsa climbed 0.4 percent and Chile’s Ipsa increased 0.5 percent.

Crude oil rose after Goldman Group Inc. said prices may reach $85 by the end of the year and extend gains in 2010 as demand recovers and supplies shrink. The advance accelerated after a report from the Labor Department showed fewer Americans filed claims for unemployment benefits last week, indicating the most acute phase of job losses may be over.

Petrobras, Cyrela

Petrobras, Brazil’s biggest publicly traded company, gained 2.8 percent to 34.09 reais. Braskem SA, Latin America’s largest petrochemical company, climbed 3.6 percent to 7.12 reais.

Cyrela, Brazil’s biggest builder, rose 3.4 percent to 14.16 reais. Yields on January 2010 contracts for interbank rates, the most traded, fell 0.02 percentage point to 9.05 percent, the lowest ever.

Brazil’s central bank is expected to cut the benchmark interest rate by 0.75 percentage point to a record 9.50 percent on June 10, according to the median of 20 estimates compiled by Bloomberg.

Second-biggest builder Gafisa SA rose 5.3 percent to 16.80 reais, paring yesterday’s 6 percent decline. Rossi Residencial SA added 7.2 percent to 7.61 reais.

Telephone Shares

Tim, Brazil’s third-biggest wireless carrier, jumped 7.8 percent to 7.87 reais. Telemar Norte Leste SA, the country’s largest phone company, rose 2.9 percent to 56.25 reais. Deutsche Bank AG raised the company to “buy” from “hold.”

“The telecom industry performs better during crises because they are more defensive stocks,” said Beatriz Battelli, an analyst at Brascan Corretora in Rio de Janeiro. Tim is also benefiting from the expectation that Brazil’s securities regulator will force controllers to make an offer for outstanding voting shares, Battelli said in a phone interview.

Randon Participacoes SA, a manufacturer of road and rail transportation equipment, rose 2.5 percent to 9.20 reais after Brazil’s automakers association said vehicle output rose 6.7 percent in May compared with April. Iochpe Maxion SA, a maker of vehicle components, rose 1.7 percent to 14.60 reais.

Cia. Siderurgica Nacional SA, the second-biggest supplier of flat steel for Brazil’s auto industry, reversed losses after the report and gained 1 percent to 47.90 reais.

Mexichem SAB led gains in Mexico’s Bolsa, rising 5.7 percent to 16.42 pesos. Latin America’s largest manufacturer of plastic pipes may be close to a deal with state oil company Petroleos Mexicanos to operate and expand a chemicals plant, Actinver SA said.

Wal-Mart de Mexico SAB, Latin America’s largest retailer, advanced 1.4 percent to 38.76 pesos after Deutsche Bank AG said the company’s May sales suggest it may still be gaining market share.

To contact the reporters on this story: Paulo Winterstein in Sao Paulo at pwinterstein@bloomberg.net.; Hugh Collins in Mexico City at Hcollins8@bloomberg.net

Last Updated: June 4, 2009 16:57 EDT