Nov. 23 (Bloomberg) -- Brazilian stocks rose for the first time in three days on speculation low interest rates and economic stimulus from the country’s biggest trading partners will sustain demand for commodities.

Petroleo Brasileiro SA and Vale SA rose more than 0.8 percent as oil and metals prices jumped. Fibria Celulose SA, the world’s largest pulp producer, climbed 2.1 percent after Morgan Stanley upgraded the stock to “overweight.” Itau Unibanco Holding SA led an advance in financial stocks as Deutsche Bank AG said banks may post earnings growth above 10 percent.

“The real economy is really strong and it would be tough to stop that trend,’ said Frederico Sampaio, who oversees 660 million reais ($361 million) in Brazilian stocks for Franklin Templeton Investimentos Brasil in Sao Paulo. “It seems like a good time for commodities. There are signs that the iron ore market is tight again and we’ll be looking for some positive surprises in the price negotiations.”

The Bovespa index added 0.7 percent to 66,809.40 as 41 stocks gained and 20 fell. The BM&FBovespa Small Cap index climbed 1.2 percent. The real strengthened 0.3 percent to 1.7265. Brazil’s markets were closed Nov. 20 for a holiday.

Mexico’s Bolsa index advanced for the first time in four days, adding 1.5 percent to 31,126.17. Chile’s Ipsa index lost 0.6 percent, while Argentina’s Merval increased 0.9 percent.

U.S. Data

Global stocks advanced as sales of U.S. homes increased more than forecast in October and speculation grew that central banks will keep interest rates near record lows. Charles Evans, president of the Federal Reserve Bank of Chicago, told the Financial Times that U.S. interest rates may stay near zero until “late 2010, perhaps later.”

The head of China’s top economic planning agency pledged to maintain economic stimulus policies. China is Brazil’s biggest export market.

China will focus on expanding domestic demand and keep “consistent, stable” macroeconomic policy including fiscal and monetary expansion, Zhang Ping, chairman of China’s National Development and Reform Commission said in Beijing on Nov. 20. China should be able to achieve its 8 percent growth target for this year, Zhang said.

Petrobras, Vale

Petrobras, Brazil’s state-controlled oil company, gained 35 centavos to 38.85 reais. Vale added 37 centavos to 42.87 reais.

Oil increased as much as 3.2 percent as the dollar weakened before erasing gains to settle little changed in New York.

Fibria rose 56 centavos to 27.80 reais. Morgan Stanley analyst Carlos de Alba upgraded the shares from “underweight,” saying in a report that “strong fundamentals in the pulp industry will support greater price increases than what market is expecting.”

Itau, Brazil’s second-largest lender, gained 2.2 percent to 37.89 reais. Banco Bradesco SA, the third-biggest, rose 1.6 percent to 35.85 reais after the stock was reiterated at “buy” by Deutsche Bank.

Brazilian banks may post “double-digit” earnings growth next year and a “strong rebound” in loan growth, Deutsche Bank said.

Itau and Bradesco have climbed more than 50 percent this year. The advance helped push the MSCI Brazil Financials Index to 17.6 times reported profit, the highest level since 2007 and above the five-year average of 14.4.

“Banks are expensive whatever multiple you’re looking at,” said Regis Abreu, executive director at Rio de Janeiro- based Mercatto Gestao de Recursos, which oversees about $1.2 billion and manages the R2 FI de Acoes fund, Brazil’s best performer this year.

Home Sales

Homebuilders jumped after U.S. existing-home sales rose 10 percent last month, adding to signs industry at the center of the deepest recession since the 1930s may contribute to a recovery. Gafisa SA, Brazil’s second-biggest builder, climbed 3.8 percent to 29.55 reais. Rossi Residencial SA rose 4.4 percent to 14.30 reais.

Consorcio Ara SAB, Mexico’s fourth-biggest homebuilder, jumped 5.3 percent to 9.28 pesos for the steepest gain in Mexico’s Bolsa index. Desarrolladora Homex SAB, the largest homebuilder, increased 5 percent to 72.72 pesos.

Cemex SAB, the largest cement maker in the Americas, rose the most in two weeks on optimism demand for U.S. housing will spur cement sales. The stock gained 2.4 percent to 14.78 pesos.

Fitch Ratings cut Mexico’s credit rating one level to BBB, the second-lowest investment grade, after falling oil output and the worst recession since the 1930s swelled the budget deficit.

The MSCI index of Latin American stocks may rise 27 percent to 5,100 by the end of 2010, JPMorgan Chase & Co. said in a research note. The advance would “not be difficult” and would require “an earning surprise that we see as very possible,” analysts led by Ben Laidler said.

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

Last Updated: November 23, 2009 16:21 EST