Feb. 16 (Bloomberg) -- Brazilian stocks gained as investors speculated that policy makers may cut the benchmark lending rate by one percentage point next month and that Cia. Vale do Rio Doce’s earnings may benefit from a weaker currency.

Cia. Vale do Rio Doce, the iron ore miner whose revenue is almost entirely denominated in dollars, gained for a second day on speculation its earnings, which will be released this week, will be buoyed by a six-month rout in the real. Redecard SA, which processes debit and credit-card transactions for Mastercard Inc., jumped the most in a week after a survey from the central bank showed economists expect policy makers to cut rates next month to 11.75 percent.

“Rates help stock two ways: they attract investors to stocks to boost returns and it also helps companies find financing at cheaper prices,” said Januario Hostin Jr., chief equity portfolio manager at Leme Investimentos in Florianopolis, Brazil, which oversees about $35 million. “People are also looking at Vale’s results, which could have a surprise because the weaker currency could help offset the drop in volumes.”

The Bovespa gained 0.4 percent to 41,841.32. The index dropped as much as 1.6 percent earlier before rebounding. Chile’s Ipsa rose 0.8 percent and Mexico’s Bolsa gained 0.8 percent at 4:16 p.m. New York time. The MSCI Emerging Markets Index declined 1.2 percent.

Yields on Brazilian bond yields neared record lows on mounting speculation the central bank will cut its benchmark lending rate for a second straight time next month.

Declining Yields

Redecard jumped 2.9 percent to 28.30 reais. Policy makers will cut the benchmark rate by a full percentage point to 11.75 percent when they next meet March 10-11, according to a central bank survey of about 100 economists released today. The forecast, from a survey carried out Feb. 13, dropped from 12 percent a week before.

Vale rose 0.8 percent to 30.92 reais after declining as much as 2 percent in earlier trading. Vale is scheduled to report fourth-quarter earnings on Feb. 19.

The yield on Brazil’s zero-coupon, local-currency bonds due in January 2010 fell four basis points, or 0.04 percentage point, to 11.1 percent, nearing its lowest since the securities began trading in October 2007.

The Bovespa dropped 2.5 percent last week as commodity prices declined and investors speculated stimulus plans may not prevent the global recession from deepening.

‘Build Over Time’

The Japanese economy contracted the most since the 1974 oil shock in the fourth quarter, according to figures from the Cabinet Office.

The G-7’s finance ministers and central bankers said in a statement released after talks in Rome on Feb. 14 that they were working to restore confidence in markets and revive the world economy. They predicted the full effect of individual rescue packages will “build over time.”

Brazilian stocks have risen 11 percent this year on speculation government efforts to support growth and falling interest rates will help the economy expand and increase demand.

The Bovespa tumbled a record 41 percent in 2008 as credit losses and writedowns topped $1 trillion in the worst financial crisis since the Great Depression and the U.S., Japan and Europe fell into the first simultaneous recessions since World War II.

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

Last Updated: February 16, 2009 17:13 EST