Nov. 4 (Bloomberg) -- Brazilian stocks rose to the highest level in a week after commodity prices advanced and steelmaker Cia. Siderurgica Nacional SA’s profit topped analyst estimates, bolstering the earnings outlook for material producers.

CSN, as Brazil’s third-biggest steelmaker is known, and rival Gerdau SA jumped more than 3 percent. Petroleo Brasileiro SA and Vale SA, Brazil’s largest oil and mining companies, rose as a weaker U.S. dollar heightened the appeal of commodities. Centrais Eletricas Brasileiras SA gained the most in two months on speculation the utility was moving closer to paying 10 billion reais in overdue dividends.

The Bovespa index added 2 percent to 63,912.57. The index of the 63 most-traded stocks entered a correction last week, losing more than 10 percent from a peak, after the government imposed a so-called IOF tax of 2 percent on foreign purchases of equity and fixed-income securities. It has pared losses since the tax was announced to 5 percent.

“Earnings season is giving support for gains,” said Jose Alberto Baltieri, who helps manage about $460 million at BES Ativos Financeiros in Sao Paulo. “Despite the scare after the IOF tax, investors are seeing that among emerging markets Brazil stands out and earnings are showing that.”

The BM&FBovespa SmallCap Index gained 1.7 percent. The real rose 1.4 percent to 1.7207 per U.S. dollar. Latin American markets maintained gains after the U.S. central bank restated today its intention to keep rates “exceptionally low” for “an extended period” as long as inflation expectations are stable and unemployment fails to decline.

Mexico’s Bolsa index added 1.9 percent, Chile’s Ipsa increased 1.7 percent and Argentina’s Merval climbed 1.7 percent. The MSCI Emerging Markets Index jumped 2.5 percent.

International Inflows

International investors added 1.14 billion reais ($660 million) of Brazilian stocks to their holdings in October, according to the Web site of exchange owner BM&FBovespa SA. Investors bought 52.3 billion reais of stock and sold 51.1 billion reais. Inflows slowed after the government imposed the tax. Net inflows for the month reached 5 billion reais on Oct. 19, when the tax was announced.

Foreign investment dropped to about $308 million a day after the IOF tax, compared with $985 million a day for the first 12 business days of the month, the central bank said today on its Web site.

Steelmakers

CSN added 3.1 percent to 60.40 reais. The Rio de Janeiro- based company said third-quarter profit surged from a year earlier, when the company posted 1.3 billion reais ($751 million) in losses tied to an equity swap.

Net income climbed to 1.15 billion reais from 39.6 million reais a year earlier. Profit excluding some items was forecast to be 743.3 million reais, the average estimate of seven analysts in a Bloomberg survey.

Bigger rival Gerdau, which is scheduled to report third- quarter earnings tomorrow, rose 3.3 percent to 27.49 reais. Usinas Siderurgicas de Minas Gerais SA, Brazil’s second-largest steelmaker after Gerdau, rose 1.1 percent to 46.40 reais.

Usiminas, as the biggest maker of flat steel for the auto industry is known, said last month that net income was 454 million reais, more than the 400.5 million reais profit expected, according to the average of three analysts surveyed by Bloomberg News.

Car Sales

New vehicle sales in Brazil jumped 23 percent in October to 294,442 units, the country’s dealership federation said today.

Passenger car sales rose 27.5 percent from a year earlier to 231,190, while sales of trucks and buses fell 10 percent to 13,136 units, according to Fenabrave, as the group is known. Sales of light trucks and vans increased 15 percent to 50,116.

Petrobras, as Brazil’s state-controlled oil company is known, gained 15 centavos to 35.70 reais. Crude oil rose for a third day as the dollar declined on speculation the U.S. Federal Reserve will say that it needs to keep borrowing costs low.

Credit Suisse Group AG boosted its profit estimates for Petrobras. The company will likely report earnings of $2.95 a share this year, up from a previous estimate of $2.87 a share, and profit of $3.65 a share in 2010, compared with a previous estimate of $3.33, analyst Emerson Leite wrote in a note, citing higher oil prices next year.

Vale, the world’s biggest iron-ore producer, advanced 1.5 percent to 41.58 reais. Copper paced gains on the London Metals Exchange. Prices of base metals including copper and zinc may advance next year as an economic recovery spurs demand for industrial metals, an analyst at South Korea’s commodity stockpiling agency said.

GVT Rallies

Eletrobras, as Latin America’s largest utility is known, rose 5 percent to 23.41 reais. The company said it would convert 11.7 billion reais ($6.7 billion) of subsidiaries’ debt into equity.

GVT (Holding) SA gained 1.3 percent to 51.65 reais. Telefonica SA boosted its offer for the telephone company by 5.2 percent to about $3.99 billion to fend off rival bidder Vivendi SA. Telefonica’s Brazilian unit, Telecomunicacoes de Sao Paulo SA, raised the offer to 50.5 reais per GVT share from 48 reais, according to a regulatory filing. The company’s earlier bid had topped Vivendi’s 42 reais-a-share offer.

Banco Bradesco SA dropped 0.7 percent to 35.03 reais. Brazil’s second-biggest bank by market value said third-quarter profit fell to 1.81 billion reais from 1.91 billion reais a year earlier. That missed the 1.84 billion reais average estimate of five analysts in a Bloomberg survey.

Mexico Stocks

The Bolsa gained to the highest level since Oct. 26 as mining companies rallied on increasing metal prices.

Grupo Mexico SAB, Mexico’s largest miner, added 2.2 percent to 27.15 pesos after Southern Copper Corp. Chief Executive Officer Oscar Gonzalez Rocha said copper prices may rebound to $4 a pound next year because of recovering economic growth in the U.S. and Europe and a lack of new supply. Cia Minera Autlan SAB, North America’s largest manganese producer, advanced 5.6 percent to 28.89 pesos.

Industrias Penoles SAB, the world’s largest dedicated silver producer, climbed 6.6 percent to 263.54 pesos.

Cemex SAB, the largest cement maker in the Americas, jumped 3.4 percent to 14.56 pesos. HeidelbergCement AG, Germany’s biggest cement maker, said it is “very optimistic” for 2010 and 2011 as the construction industry emerges from its worst slump in decades and cost-cutting efforts pay off.

To contact the reporters on this story: Paulo Winterstein in Sao Paulo at pwinterstein@bloomberg.net; Emily Schmall in Mexico City at eschmall@bloomberg.net.

Last Updated: November 4, 2009 16:59 EST