July 1 (Bloomberg) -- Lojas Renner SA, Brazil’s biggest publicly traded clothing retailer, rose the most in almost a week after Credit Suisse Group AG and UBS AG recommended buying companies that benefit most from local economic growth.

Lojas Renner climbed 1.8 percent to 22 reais in Sao Paulo trading, the biggest gain since June 25. The benchmark Bovespa stock index advanced 0.2 percent.

Credit Suisse analysts led by Sao Paulo-based Emerson Leite said there are “clear indications the Brazilian economy has bottomed” and increased portfolio weightings in Porto Alegre, Brazil-based Renner, according to a note today. UBS strategist Pedro Batista recommended domestically focused Brazilian companies over commodity producers.

“Our call remains linked to local economic growth and interest rate declines,” Rio de Janeiro-based Batista wrote in a report to clients also e-mailed today. “We seek exposure to domestic linked stocks, good dividend plays, companies with strong free cash flow yields and names that will benefit from falling interest rates.”

Brazil’s central bank predicts 0.8 percent growth for Latin America’s biggest economy this year, an outlook that’s rosier than private estimates, which call for gross domestic product to shrink 0.5 percent, according to the median forecast in a central bank survey of about 100 economists published this week.

Rate Cuts

Policy makers reduced the benchmark interest rate to a record 9.25 percent this year, slashing the so-called Selic rate by at least a percentage point at each of 2009’s four meetings. The country’s unemployment rate dropped in May for a second straight month as signs the economy is reviving prompted companies to rehire workers.

The central bank expects investment to rebound as companies gain easier access to funding through capital markets, according to its forecast last week. Retail sales, which partially offset the effects of the global financial crisis in the past months, will help sustain the recovery, the bank said.

Credit Suisse also said it increased its “overweight” position in Brazilian food companies. Perdigao SA, the company buying Sadia SA to form the country’s biggest food producer, increased 1 percent to 37.89 reais. Sadia added 1.5 percent to 4.83 reais.

To contact the reporter on this story: Fabiola Moura in New York at fdemoura@bloomberg.net

Last Updated: July 1, 2009 17:45 EDT