Dec. 1 (Bloomberg) -- Brazilian stocks jumped the most in three weeks as Chinese manufacturing grew the fastest since April 2004 and Dubai World said it’s in talks to restructure less than half its debt.

Petroleo Brasileiro SA, Brazil’s state-controlled oil company, climbed to its highest level since July 2008 as crude rose above $78 a barrel. Gerdau SA, Latin America’s biggest steelmaker, led gains for raw-material producers as metals rose and Barclays Plc raised its share-price estimate. Utilities Centrais Eletricas Brasileiras SA and CPFL Energia SA jumped more than 3 percent after analysts upgraded the shares.

The Bovespa stock index climbed 2 percent to 68,408.40 for the biggest gain since Nov. 9. All but ten stocks on the index advanced. The measure has surged 82 percent this year to the highest level since June 2008.

“We’re seeing strong flows and buyers that are hard to appease,” said Alexandre Ghirghi, who manages 100 million reais ($55 million) at Metodo Investimentos in Sao Paulo. “It looks like we may make it to 70,000 this year.”

The BM&FBovespa Small Cap index added 0.7 percent to 1,126.35. The real strengthened 2 percent to 1.7207 per dollar. Among other Latin American markets, Chile’s Ipsa index added 2 percent, while Argentina’s Merval jumped 2.9 percent and Mexico’s Bolsa surged 2.7 percent. The MSCI Emerging Markets Index increased 2.3 percent.

China, Dubai

Stocks rallied around the world as Chinese manufacturing grew and Dubai said half of its debts are “stable,” easing concern that a default would boost the $1.7 trillion financial companies around the world have written down as the credit crisis impaired the value of their assets.

In China, the purchasing managers’ index released today by HSBC Holdings Plc rose to a seasonally adjusted 55.7 from 55.4. The government’s PMI, also released today, held at an 18-month high. China is Brazil’s biggest buyer of exports.

Metals and oil also rose as a drop in the dollar increased the allure of commodities as a hedge against inflation. The U.S. Dollar Index, which measures the greenback’s value against six currencies, fell for a second day.

Petrobras, as the energy company is known, advanced 2.6 percent to 39.79 reais. Vale SA, the iron-ore producer whose biggest market is China, added 1.3 percent to 42.90 reais.

Gerdau climbed 3.5 percent to 28.05 reais. The steelmaker had its price estimate raised 9.6 percent at Barclays on improved cost control and new investments. Gerdau’s end of 2010 target price was raised to 28.5 reais from 26 reais, Sao Paulo- based analyst Leonardo Correa said in a note to clients.

Utility Upgrades

Eletrobras, as Brazil’s biggest power utility is known, gained 3.7 percent to 26.21 reais. The stock was raised to “buy” from “neutral” at Goldman Sachs Group Inc., which said its discount to its peers is “now excessive.”

CPFL Energia rallied 5.3 percent to 33.80 reais. Brazil’s largest private-sector power distributor was raised to “buy” from “hold” at Raymond James & Associates Inc., which cited the company’s outlook for growth and industry consolidation.

Banco Santander Brasil SA, the Brazilian unit of Spain’s biggest bank, rose 3.8 percent to 24 reais, the highest level since shares began trading in October. The stock was rated “overweight” at Morgan Stanley, which said the company is its top investment idea among Brazilian banks.

Analyst Jorge Kuri raised Brazil financial stocks to “in line” from “cautious.” Itau Unibanco Holding SA, Brazil’s biggest bank by market value, jumped 4.2 percent to 39.54 reais.

In Mexico, industrial and commodity stocks rallied after manufacturing in the U.S. expanded in November for a fourth consecutive month and Credit Suisse Group AG increased its weighting of infrastructure companies.

Mexico Stocks Outlook

Industrias CH SAB, the largest Mexican steelmaker, gained 5.3 percent to 42.49 pesos, the most since Nov. 13.

Cemex SAB, the largest cement maker in the Americas, rose 1.3 percent to 14.89 pesos.

The Bolsa index has lagged other Latin American markets this year and investors are buying stocks on the prospect of higher earnings and a stronger peso, Jose Miguel Garaicochea, who manages 9.7 billion pesos ($754 million) at Banco Santander Mexico SA, said in a phone interview today.

“Mexico’s fourth-quarter earnings are going to be very good,” he said. “Fourth-quarter profits probably will grow at rates of 120 percent, especially now, that those profits are being boosted by the exchange rate.”

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

Last Updated: December 1, 2009 15:56 EST