The Bovespa (IBOV) stock index rose for a second day as Embraer (EMBR3) SA surged after signing an agreement to sell 47 aircraft and as Brazil announced a plan to cut power costs more than previously forecast to damp inflation.
Aircraft maker Embraer headed to the biggest advance in two years after signing a $4 billion contract with Republic Airways (RJET) Holdings Inc. State-controlled power utility Centrais Eletricas Brasileiras SA (ELET6) fell the most on the stock gauge.
The Bovespa index rose 0.3 percent to 62,133.07 at 11:07 a.m. in Sao Paulo after President Dilma Rousseff said late yesterday the cuts that go into effect today rather than early next month will pare consumers’ power costs 18 percent and those for industry by 32 percent, compared with the reductions of 16.2 percent and 28 percent she had announced in September.
“Dilma’s announcement has the goal of boosting growth in the country,” Andre Perfeito, the chief economist at Gradual Investimentos, said by phone from Sao Paulo.
The real was little changed at 2.0357 per U.S. dollar.
Embraer rose 8.5 percent to 15.88 reais, the biggest advance on a closing basis since January 2011. Eletrobras, as Centrais Eletricas is known, fell 1.7 percent to 12.90 reais.
The Bovespa entered a bull market on Jan. 3 after rising 21 percent from last year’s low on June 5 as stimulus from central banks around the world eased concern economic growth might miss expectations while borrowing costs at a record low in Brazil boosted equity demand. The index has since pared its advance to 18 percent.
Brazil’s benchmark equity gauge trades at 11.5 times analysts’ earnings estimates for the next four quarters, compared with 10.9 for MSCI’s measure of 21 developing nations’ equities, data compiled by Bloomberg show.
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