Bovespa Rises as Petrobras Rallies on 2013 Fuel Price Increase

The Bovespa (IBOV) index advanced for a second day as Petroleo Brasileiro SA (PETR4) rallied after Finance Minister Guido Mantega said the state-run producer will raise gasoline prices.

Petrobras contributed the most to the gauge’s advance after Mantega, who is also the company’s chairman, said today in Brasilia that there will “certainly” be a price increase in 2013. Homebuilder PDG Realty SA Empreendimentos & Participacoes rose the most in almost two weeks amid speculation a stronger global economy will support Brazil’s recovery.

The Bovespa climbed 0.9 percent to 60,998.34 at the close of trading in Sao Paulo, extending its increase in 2012 to 7.5 percent. Forty stocks rose on the gauge today while 26 sank. The real strengthened 0.8 percent to 2.0718 per dollar.

“A price increase is key for Petrobras to carry on with its huge investment plan,” said Roberto Altenhofen, an analyst at Sao Paulo-based consulting firm Empiricus Research.

The Rio de Janeiro-based producer said in a regulatory filing today it plans to cut operating costs by 32 billion reais between 2013 and 2016 as it ramps up offshore crude reserve investments. Petrobras plans to invest $236 billion between 2012 and 2016, mostly on exploration and production. The stock, the heaviest-weighted on the Bovespa after Vale SA (VALE), rose 3.8 percent to 20.93 reais.

U.S. stocks fell as political leaders in Washington tried to reach a budget deal. The $607 billion in spending cuts and tax increases set to take effect next year without an agreement may lead to a recession and a higher jobless rate, the Congressional Budget Office has said.

Recovery Prospects

“There are more signs that the U.S. will soon have a solution for the so-called fiscal cliff, and once that happens, the road to recovery will be pretty much open over there,” Hamilton Moreira, a strategist at Banco do Brasil SA, said by phone from Sao Paulo. “Things for the global economy should be better next year, and with Brazil’s trading partners growing at a faster pace, Brazil itself will probably follow suit.”

PDG Realty jumped 2.5 percent to 3.27 reais.

Vale, the world’s largest iron-ore producer, fell for the first time in nine days, dropping 1.2 percent to 40.51 reais after it agreed to pay 212 million Swiss francs ($233 million) to settle a tax dispute with Switzerland.

The Bovespa index has climbed 16 percent from this year’s low in June as stimulus from central banks around the world eased concern about an economic slowdown while record low benchmark lending rates have pushed some investors to move into stocks from fixed income.

The index trades at 11.3 times analysts’ earnings estimates for the next four quarters, compared with 11.1 times for MSCI Inc.’s measure of 21 developing nations’ equities, data compiled by Bloomberg show.

Trading volume was 8.52 billion reais in stocks in Sao Paulo today, according to data compiled by Bloomberg. That compares with a daily average of 7.28 billion reais this year through Dec. 17, according to data compiled by 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 at papadopoulos@bloomberg.net

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