Oct. 13 (Bloomberg) -- Brazilian stocks gained for a third day, led by homebuilders and commodity producers, on the prospect faster economic growth will bolster earnings.

Gafisa SA, Brazil’s second-biggest homebuilder, rose the most in the Bovespa after economists increased their growth forecasts. Cyrela Brazil Realty S.A. Empreendimentos e Participacoes surged 6.6 percent on speculation its plan to sell 43 million shares will raise enough money for future projects. MMX Mineracao e Metalicos SA, the iron-ore miner controlled by billionaire Eike Batista, extended its longest winning streak in more than two years on speculation iron ore prices may rise.

“These sales are important for these companies to reach their growth targets,” said Eduardo Roche, who helps manage the equivalent of $389 million at Banco Modal SA in Rio de Janeiro. “It brings more money to the market but it’s also a big test.”

The Bovespa index advanced 0.9 percent to 64,645.59. The BM&FBovespa Small Cap index advanced 1.8 percent. The markets were closed yesterday for a holiday. Mexico’s Bolsa rose 0.5 percent today and the MSCI Emerging Markets index added 0.2 percent.

Gafisa led gains for homebuilders, advancing 8.8 percent to 29.92 reais. Brazil’s gross domestic product will expand 0.10 percent this year and 4.80 percent next year, according to a central bank survey of about 100 economists published today. Higher growth will spur sales of homes, analysts said.

“Last week there was a measure by the government to increase financing limits in the housing package,” said Eduard Silveira, an analyst at Fator Corretora de Valores in Sao Paulo “Other cities besides just Sao Paulo, Rio de Janiero and Brasilia will also have some of their housing funded in the package.”

Cyrela Share Sale

The Brazilian government announced a plan on March 24 to spend 34 billion reais ($18.8 billion) to build 1 million homes for low-income workers.

Cyrela climbed 6.6 percent to 26.49 reais. The public offering may include an over-allotment of 15.05 million shares, the Sao Paulo-based company said in a prospectus posted today on the Web site of the securities regulator. Without the over- allotment, the offer will be worth 1.08 billion reais ($622.8 million) based on the current share price.

‘Still Strong’

“The appetite for Brazilian stocks is still strong,” said Roche. “The market seems to be absorbing the share offering quite well at this point in time.”

Banco Santander (Brasil) SA, the Brazilian unit of Spain’s biggest bank, said Oct. 6 it’s raising a record 14.1 billion- real ($8 billion) in an initial public offering.

MMX gained for a 13th day, rising 5 percent to 13.44 reais. The stock has surged 31 percent in the past 13 days, extending its gain this year to 385 percent.

“The iron ore market improved and there’s been more talk of M&A in the future,” said Marcos Assumpcao, an Itau Unibanco Holding SA analyst in Sao Paulo. “MMX is being seen as a potential M&A player” in the next couple of years.

The Bolsa advanced for an eighth day, led by construction companies and retailers. Controladora Comercial Mexicana SAB, the supermarket retailer that defaulted on its debt a year ago, gained the most in the index after Citigroup Inc. boosted its share-price estimate to 13.50 pesos from 9.50 pesos.

“There are expectations of a happy ending with creditors,” said Gerardo Roman, head of trading at Mexico City- based Actinver SA. Comerci, as the company is known, advanced 4.8 percent to 11.27 pesos.

Cemex SAB, the world’s third-largest cement maker, added 1.5 percent to 17.76 pesos. Banco Santander SA said Cemex may report a “slight improvement” in third-quarter earnings from the previous quarter. Empresas ICA SAB, Mexico’s largest construction company, climbed 2.4 percent to 34.73 pesos.

To contact the reporters on this story: Alexander Ragir in Rio de Janeiro at aragir@bloomberg.net; Emily Schmall in Mexico City at eschmall@bloomberg.net

Last Updated: October 13, 2009 17:02 EDT