Oct. 2 (Bloomberg) -- Brazilian stocks rallied, making the Bovespa the world’s best-performing major index today, and the currency gained after Rio de Janeiro was awarded the 2016 Summer Olympic Games.

The Bovespa climbed 1.2 percent to 61,171.99, led by airlines Tam SA and Gol Linhas Aereas Inteligentes SA. The real, the best-performing emerging-market currency against the dollar this year, rose 0.3 percent to 1.7820.

“Improving roads, stadiums, there is going to be a significant boost to growth,” Citigroup Inc. Latin America equity strategist Geoffrey Dennis said in a phone interview from New York. “Brazil is arriving. It has arrived in the global stage. This is a kind of reward for Brazil’s excellent policy.”

Rio, which is hosting the World Soccer Cup in 2014, beat Madrid, Chicago and Tokyo to become the first city in South America to host the Summer games.

The games will help sustain Brazil’s economic growth by injecting $51.1 billion into Latin America’s largest economy through 2027 and add 120,000 jobs annually through 2016, according to studies by a Sao Paulo business school for the Ministry of Sports. Brazil plans $11 billion of investments as host, more than any other of the bidding cities.

“When you look at hotels, the airlines, infrastructure, all these sectors obviously will gain,” said Tony Volpon, Latin America strategist at Nomura Securities International Inc.

Airlines, Steelmakers Gain

Gerdau SA, Latin America’s largest steelmaker, jumped 3.3 percent to 23.86 reais today. Tam, Brazil’s biggest airline, climbed 3.5 percent to 23.81 reais. Gol, the second-biggest, rose 3 percent to 18.34 reais.

The winning bidder may also get a stock-market boost, an economist at Germany’s ZEW institute said Sept. 30.

“Winning the Olympics bid, after having the rights to host to 2014 World Soccer Cup, will definitely increase the chances of more investments to Brazil,” said Adilson Goes, currency director at Fair Corretora, in a telephone interview from Sao Paulo. “Market sentiment turned positive.”

Brazil’s victory also comes after Moody’s Investors Service boosted the nation’s rating to Baa3, the lowest investment- grade, on Sept. 22, one year after the global credit crisis.

The nation’s gross domestic product grew more than analysts forecast in the second quarter, signaling the economy is recovering from the global recession faster than other developing countries.

The Bovespa has gained 63 percent this year, compared with a 19 percent rise in the MSCI World Index of 23 developed countries. It rose 1.4 percent this week.

Hotels Gain

Hoteis Othon SA, which operates hotels in Brazil, surged 78 percent to 64 centavos from 36 centavos yesterday.

“The big beneficiaries will always be hotels,” said Bill Rudman, who helps manage $1.5 billion in emerging-market stocks at Blackfriars Asset Management, in a telephone interview from London.

Vale SA and Petroleo Brasileiro SA, Brazil’s two biggest commodity producers, may benefit from increased infrastructure spending, said Richard Kang, chief investment officer at Emerging Global Advisor.

“The infrastructure will be gigantic,” Kang said in a phone interview from New York. “Luckily for Brazil they have all the commodities to deal with massive infrastructure projects.”

Real Outlook

The real gained 0.5 percent this week. It was its fifth straight week of advances, the longest winning streak since the period ended May 2, 2008. It has rallied 30 percent in 2009.

The yield on Brazil’s zero-coupon, real-denominated bond due in January 2011 fell for the first time in three days, dropping 11 basis points, or 0.11 percentage point, to 10.24 percent today.

Rio, in a metropolitan area with 12 million people, centered its bid on using sports as a catalyst for social integration, celebration and transformation of the city, the region and the country. The city promised “impeccable games” that will improve the city’s infrastructure, security and environment, and generate 50,000 temporary jobs and 15,000 permanent ones.

To contact the reporter on this story: Fabio Alves in New York at falves3@bloomberg.net

Last Updated: October 2, 2009 17:05 EDT