Feb. 27 (Bloomberg) -- Brazilian stocks gained for a sixth day on prospects economic growth will accelerate after the government reported a budget surplus and the currency climbed to its highest in nine years.

Brasil Telecom Participacoes SA, the owner of Brazil's third- largest fixed-line telephone company, and homebuilder Gafisa SA had the biggest gains in the index after the central bank said Brazil posted a budget surplus of 5.53 billion reais ($3.3 billion) in January, following a deficit of 24 billion reais in December. The central bank last week said the country became a net creditor for the first time in January.

The Bovespa index of the most-traded stocks on the Sao Paulo exchange gained 312.24, or 0.5 percent, to 65,494.85, and earlier traded above its Dec. 6 record. The index has climbed 2.5 percent this year, the best performance among benchmarks tracking the world's 20 biggest stock markets, according to data compiled by Bloomberg. Mexico's Bolsa index rose 0.7 percent today.

``The outlook for Brazil is good,'' said Luis Carlos Ferreira, trader at Intra Corretora in Sao Paulo, which manages the equivalent of about $2 billion in assets.

Even after outperforming the MSCI World Index this year the Bovespa index trades at an average of 12.68 times estimated earnings. The MSCI World Index, a stock benchmark of developed countries, has an average price-to-earnings ratio of 13.46.

``The reason Brazil is benefiting more from its economic growth is because it's cheaper on a price-to-earnings basis,'' said Audrey Kaplan, who helps manage $44 billion in stocks at Federated Investors Inc. in New York.

Heavier Weighting

The gains have given Brazilian companies the largest weight in the MSCI emerging market index, Citigroup Inc.'s Geoffrey Dennis wrote in a note to clients today. Petroleo Brasileiro SA, the heaviest weighted stock on the Bovespa, is now the biggest emerging market company by market value, wrote Dennis, the bank's Latin American strategist.

The country's currency strengthened for an eighth straight day, reaching an almost nine-year high as a tumbling U.S. dollar and surging commodity prices boosted demand for the currency of Latin America's biggest economy.

``We have been more hopeful that Brazil's debt will rise to an investment grade rating,'' Kaplan said in a telephone interview.

Brasil Telecom Participacoes gained 1.18 reais, or 5 percent, to 24.71 reais. UBS raised its rating on the stock, citing the potential for higher dividends.

Homebuilders

Gafisa rose 4.9 percent to 32.64 reais. Cyrela Brazil Realty SA jumped 2.2 percent to 27.34 reais. Klabin Segall SA, another real estate developer, surged 7.1 percent to 11.26 reais.

Mexico's Bolsa index rose to the highest in 11 weeks after homebuilders reported earnings better than analysts expected, alleviating concern a U.S. housing slump would spread to Mexico. The Bolsa index advanced 196.68 to 30,424.76, the highest since Dec. 10.

Urbi Desarrollos Urbanos SAB, Mexico's second-largest homebuilder by market capitalization, rose 4.6 percent to 41.70 pesos, the highest in four months. Urbi reported yesterday net income rose 45 percent in the fourth-quarter from a year earlier.

Desarrolladora Homex SAB, the country's largest homebuilder, gained 4.4 percent after it said net income more than doubled, topping the average of four analysts compiled by Bloomberg.

``Urbi and Homex reported very strong growth, and when you beat the analysts estimates, the shares react,'' said Gonzalo Fernandez, equity strategist for Santander Investment in Mexico City, in a phone interview.

Copper miner Grupo Mexico SAB rose 1.7 percent to 77.13 pesos as prices of the metal rose 1.5 percent in New York.

Elsewhere in Latin America, the main stock indexes in Argentina and Peru rose, while Colombia and Venezuela's benchmark indexes fell. Chile's Ipsa index was little changed. The MSCI EM Latin America Index advanced 1.5 percent to 4,670.74.

To contact the reporters on this story: Alexander Ragir in Rio de Janeiro at aragir@bloomberg.net; William Freebairn in Mexico City wfreebairn@bloomberg.net.

Last Updated: February 27, 2008 16:55 EST