Sept. 15 (Bloomberg) -- Brazilian stocks climbed, sending the Bovespa index to its highest since July 2008, after retail sales accelerated, commodities advanced and Petroleo Brasileiro SA said it found more oil.

Lojas Renner SA, Brazil’s biggest clothing retailer, rose to the highest in a year after retail sales increased 5.9 percent in July. Petrobras, as the state-controlled oil company is known, climbed 0.5 percent after it found another deposit of oil and natural gas in the Santos Basin. Rossi Rosidencial SA, the real estate developer, gained the most in the Bovespa after Itau Unibanco Holding SA said Brazil is beginning to develop a secondary mortgage market.

“Since Brazil has a better outlook than most of the rest of the world and the possible of a stronger currency is strong, it makes sense for foreigners to invest here,” said Gilberto Nagai, who oversees the equivalent of $1.1 billion in Latin American equities as executive director of Fortis Gestao de Investimentos Brasil in Sao Paulo.

The Bovespa increased for a second day, gaining 0.7 percent to 59,263.86. Thirty-five stocks rose on the index while 23 fell. The BM&FBovespa Small Cap index gained 0.4 percent to 962.67. The real climbed to its strongest level against the dollar in a year. Among other markets in Latin America, Mexico’s Bolsa rose 0.8 percent and Chile’s Ipsa lost 0.1 percent. The MSCI Emerging Markets index gained 1.1 percent.

The Bovespa is up 22 percent since Lehman Brothers Holdings Inc.’s collapse a year ago on speculation a rebound in commodity prices and record-low interest rates will bolster growth in Latin America’s largest economy. The index, which slid a record 41 percent in 2008, has doubled from its Oct. 27 low last year.

Investors who retreated to the safety of government debt when Lehman filed for the world’s biggest bankruptcy on Sept. 15, 2008, are buying riskier assets after governments pumped $12 trillion into economies to drive down borrowing costs.

Recession End

Lojas Renner added 0.5 percent to 30.95 reais. Brazil’s retail sales accelerated for the second straight month in July, reinforcing bets that domestic demand will power the country’s economic rebound.

Brazil last week became the latest Group of Twenty economy to pull out of a recession, after the German and French economies unexpectedly grew in the second quarter following their worst slump since World War II.

Petrobras rose 16 centavos to 33.40 reais. Its discovery was made together with BG Group Plc and Repsol YPF SA after a fourth well was drilled in the BM-S-9 block off the country’s southeastern coast, Brazil’s state-run oil company said in a statement last night. The Abare Oeste field is neighbor to the Carioca, Guara and Iguacu fields, where the company has already reported the existence of crude.

Oil Gain

Crude oil rose for the first time in three days as sales at U.S. retailers surged in August by the most in three years and manufacturing in the New York region grew, signaling the economy is recovering from the recession.

Rossi surged 3.9 percent to 12.92 reais. Cyrela gained 2.3 percent to 24.56 reais. Gafisa SA added 1.6 percent to 28.76 reais.

Brazil’s real estate market reached bottom last year and is recovering, David Lawant, a real estate analyst at Sao Paulo- based Itau, Brazil’s largest non-state bank, said at a conference in New York.

“We are on the verge of seeing a very large increase of securitization of receivables” of residential real estate, Lawant said at the Brazilian-American Chamber of Commerce event.

UBS AG said homebuilders are going to sustain “rapid growth rates.”

“We believe the outlook remains positive for the sector as Brazil enjoys unprecedented low interest rates and improving consumer confidence, all of which should be well supported by strong capital availability and pave the way for Brazilian homebuilders to further accelerate growth in the next several months,” analysts Gordon Lee and Rodrigo Monteiro wrote.

Mexico Stocks

The Bolsa advanced to the highest level since June 2008 on gains for chemical, mining and construction companies.

Basic materials have gained this year because of record spending on infrastructure development, said Rogelio Gallegos, who helps manage about $255 million at brokerage Actinver SA in Mexico City.

“Economists are worried about what’s going to happen when governments end the stimulus, but by then companies will have been building on the momentum to create more confidence, and will continue to rise on their own,” Gallegos said.

Construction Stocks

Empresas ICA SAB, Mexico’s largest construction company, rose the most on the index. ICA gained 4 percent to 30.97 pesos, benefiting from a surge in retail sales in the U.S., the buyer of 80 percent of Mexican exports, said Karla Pena, an analyst at Interacciones Casa de Bolsa in Mexico City. Mexico same-store sales rose 1.5 percent in August from a year ago. The results suggest “the worst has passed,” Citigroup Inc. analysts said in a report released late yesterday.

Industrias Penoles SAB, the world’s largest dedicated silver producer, advanced 3.4 percent along with the price of the metal. Mexichem SAB, the largest maker of plastic pipes in Latin America, added 3.6 percent.

In other Latin American markets, Argentina’s Merval rose 0.6 percent and Peru’s Lima General fell 0.6 percent.

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: September 15, 2009 17:04 EDT