Bovespa Advances Seventh Day as BR Malls Gains on Rate Outlook

Brazil’s Bovespa index rose for a seventh day as shopping-mall owner BR Malls Participacoes SA led gains among companies that sell in the local market after slower-than-forecast inflation spurred speculation that cheaper credit will boost demand.

Itau Unibanco Holding SA, Latin America’s biggest bank by market value, gained as the MSCI Brazil/Financials Index jumped the most among 10 industry groups. Petroleo Brasileiro SA advanced as crude rose and after Chief Financial Officer Almir Barbassa said the company will wait until next year to sell dollar bonds to avoid flooding the market.

The Bovespa increased 0.2 percent to 66,060.16 at 1:46 p.m. in Sao Paulo. Thirty-nine stocks climbed on the gauge, while 30 fell. The real gained 0.5 percent to 1.7169 per U.S. dollar.

“Every sign that inflation is slowing and that policy makers will have room to keep lowering interest rates is positive for stocks,” Fausto Gouveia, who helps manage about 250 million reais ($146 million) at Legan Administracao de Recursos, said by phone from Sao Paulo. “Not only is this good for the economy and for the companies that sell on credit, but it’s good for the equity market as investors are encouraged to get out of fixed income and move to stocks.”

Consumer prices as measured by the IPC-S index rose 0.46 percent in the 30 days through Feb. 7, from 0.81 percent in the previous period, the Getulio Vargas Foundation said today. That was less than the 0.65 percent median estimate of 21 economists surveyed by Bloomberg.

Rate Outlook

In the interest-rate futures market, yields on most contracts fell. The yield on the contract due in January 2013 dropped six basis points, or 0.06 percentage point, to 9.39 percent. A close at that level would be a record low.

BR Malls added 1.6 percent to 20.51 reais. Petrobras, as Petroleo Brasileiro is known, climbed 0.6 percent to 25.76 reais. Itau rose 1.6 percent to 36.97 reais.

Industrias Romi SA, a Brazilian machinery manufacturer, slumped 8.1 percent to 6.11 reais after reporting a fourth- quarter loss of 17.2 million reais, according to a regulatory filing yesterday. That compares with a mean estimate of a loss of 4.27 million reais in a Bloomberg survey of three analysts.

Brazil’s benchmark equity gauge has advanced 17 percent this year, after slumping 18 percent in 2011, buoyed by interest-rate cuts, signs of growth in the U.S. and renewed optimism Europe may be closer to solving its debt crisis. The index trades at 10.4 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 8.08 billion reais in stocks in Sao Paulo yesterday, data compiled by Bloomberg show. That compares with a daily average of 6.53 billion reais this year through Feb. 3, according to data from the exchange.

To contact the reporter on this story: Ney Hayashi in Sao Paulo at ncruz4@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos in New York at papadopoulos@bloomberg.net

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