The Bovespa stock index advanced the most in two weeks, following its first annual loss since 2008, as Gafisa SA (GFSA3) led a rally by homebuilders after economists cut their forecast for Brazil’s inflation for a fifth-straight week.
Gafisa, Brazil’s third-biggest homebuilder by revenue, was the best performer on the gauge, and the BM&FBovespa Real Estate Index (IMOBBV) jumped the most in two months. Plane builder Embraer SA (EMBR3) rose for a fourth day after the company and Sierra Nevada Corp. were awarded a $355 million contract to provide 20 A-29 Super Tucano aircraft to the U.S. Air Force.
The Bovespa rose 1.9 percent to 57,829.27 at the close of trading in Sao Paulo. Forty-seven stocks climbed on the gauge today, while 22 fell. The real weakened 0.2 percent to 1.8714 per U.S. dollar. Brazil’s benchmark equity index fell 18 percent in 2011, the biggest drop since 2008, when it plunged 41 percent.
Consumer prices will increase 5.32 percent in Brazil this year, according to the median forecast in a Dec. 30 central bank survey of about 100 economists published today, from a forecast of 5.33 percent the previous week.
“I don’t see major problems in the Brazilian economy, as the global slowdown will probably help to curb inflation,” Alvaro Bandeira, a director at Ativa Corretora brokerage, said in a telephone interview from Rio de Janeiro. “The main source of uncertainty is still the international markets. A better performance for the Bovespa in 2012 will depend on what happens in Europe and in the U.S.”
European stocks gained on their first trading day this year as a measure of German manufacturing beat estimates. U.S. markets were closed today for the New Year’s holiday.
Economists covering Brazil also cut their forecast for 2011 economic growth to 2.87 percent, according to the central bank survey, from 2.90 percent the previous week. Latin America’s largest economy will expand 3.3 percent this year, from a previous forecast of 3.40 percent, according to the survey.
Embraer rose 0.3 percent to 11.80 reais after earlier gaining as much as 2 percent. Gafisa surged 8.7 percent to 4.48 reais. The BM&FBovespa Real Estate index (IMOBBV) added 3.8 percent, the most since Oct. 6.
The Bovespa entered a bull market in October after gaining 22 percent from a two-year low on Aug. 8 as interest-rate cuts in Brazil and signs of progress in solving Europe’s debt crisis buoyed demand for equities. The measure has since pared its advance to 17 percent.
The index trades at 10 times analysts’ earnings estimates, in line with the ratio for MSCI Inc.’s measure of 21 developing nations’ equities, weekly data compiled by Bloomberg show.
Traders moved 3.89 billion reais ($2.08 billion) in stocks in Sao Paulo today, data compiled by Bloomberg show. That compares with a daily average in 2011 of 6.51 billion reais through Dec. 27, according to data from the exchange.
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