April 13 (Bloomberg) -- Brazilian stocks rose, extending the Bovespa index’s best weekly rally since May, on speculation thawing credit markets will bolster economic growth and demand for exports.

Cia. Vale do Rio Doce and Votorantim Celulose e Papel SA led gains by commodity producers on bets government spending in China will boost demand for pulp and steel. Telemar Norte Leste SA rose the most in a week as Brazil’s biggest telephone company prepared to sell $500 million of bonds in overseas markets.

“Most of the bad news is priced in,” said Guilherme Sand, who helps manage the equivalent of $250 million at Solidus Brokerage in Porto Alegre. “People are separating emerging markets from developed markets, which is the heart of the problem.”

The Bovespa index climbed 1 percent to 45,991.89. The gauge capped its fifth straight weekly gain on April 9, the longest advance since the measure touched a record in May. The market was closed April 10 for the Good Friday holiday.

Mexico’s Bolsa climbed 6.4 percent, while Chile’s Ipsa rose 2 percent. The MSCI Emerging Markets Index increased 0.8 percent to the highest level in six months.

China, the world’s biggest metals user, pledged “ample liquidity” to “ensure money supply and loan growth meet economic development needs,” the central bank said yesterday. New loans in China last month advanced more than sixfold from a year earlier to a record, the central bank said last week.

China Economic Stimulus

China is considering additional economic stimulus measures to boost consumption and bolster growth, the official China Securities Journal reported today, citing Gao Huiqing, a researcher at the State Information Center. The country has already rolled out a $585 billion stimulus package.

Vale, the world’s biggest iron-ore exporter, jumped 2.4 percent to 30.42 reais. VCP, as the pulp producer is known, climbed 8.1 percent to 15.57 reais.

Telemar gained 2.2 percent to 55.80 reais. The company may complete its debt sale this week, after pitching the bonds to investors in New York, Boston and London, said a person familiar with the offering who declined to be identified because he isn’t authorized to speak publicly.

Odebrecht SA, a Salvador, Brazil-based construction company, sold $200 million of five-year bonds in overseas markets to yield 10 percent on April 2. The sales by Telemar and Odebrecht show a “reopening of the market” for Brazilian companies, Fitch Ratings said.

The Bovespa has climbed 22 percent this year on speculation government stimulus measures, falling interest rates and a recovery in commodity prices will shore up growth in Brazil’s economy. The gauge is up 56 percent from its Oct. 27 low.

Mexican Stocks

Mexican stocks rallied to the highest in three months, led by homebuilders, on the currency’s advance and the prospect the central bank will cut lending rates this week to boost growth in Latin America’s second-biggest economy.

Banco de Mexico will cut its key rate to 6 percent from 6.75 percent at a meeting on April 17, according to the median estimate of 15 economists surveyed by Bloomberg. The bank began reducing its target in January from 8.25 percent.

Elsewhere in Latin America, the Lima General index gained 5.8 percent and Argentina’s Merval rose 5.3 percent. Both stock markets were closed April 9, when stocks rallied worldwide on speculation government measures to revive the global economy are working.

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

Last Updated: April 13, 2009 17:24 EDT