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Bovespa Snaps Two-Day Drop as Inflation View Boosts Souza Cruz

The Bovespa (IBOV) index snapped a two-day decline as tobacco company Souza Cruz SA led gains among consumer stocks amid speculation a stronger real will help curb inflation.

Brewer Cia. de Bebidas das Americas jumped to a record high. Vale SA, the world’s biggest iron-ore producer, contributed most to the index’s advance as it said prices of the steel-making ingredient are supported by prospects of Chinese growth. Suzano Papel & Celulose SA, Latin America’s second- largest pulp maker, fell the most on the gauge.

The Bovespa climbed 0.6 percent to 60,406.33 at the close of trading in Sao Paulo. Forty-five stocks rose on the measure while 23 fell. The real appreciated 0.5 percent to 1.9850 per dollar.

“The real has gained a lot, which helps the central bank to keep inflation from surging, at least for now,” Rogerio Freitas, a partner at Rio de Janeiro-based hedge fund Teorica Investimentos, said in a phone interview. “It may have a positive impact on some stocks in the short term.”

Souza Cruz gained 2.9 percent to 32.93 reais. AmBev, as Bebidas das Americas is also known, increased 2.1 percent to 92.57 reais. Souza Cruz gained 2.9 percent to 32.93 reais.

Usinas Siderurgicas de Minas Gerais SA, Brazil’s second- biggest steelmaker, jumped 2.6 percent to 10.62 reais, paring this month’s slump to 17 percent. The stock’s recent selloff was excessive given the outlook for the industry, said Pedro Galdi, the chief strategist at Sao Paulo-based brokerage SLW Corretora.

“We’re seeing a correction on Usiminas,” he said in a phone interview. “After falling so much, it started to attract buyers.”

Vale gained 1.2 percent to 38.13 reais, the biggest jump in four weeks.

Export Outlook

The Bovespa earlier tumbled as much as 0.4 percent as some commodities producers dropped on concern the stronger real will hurt exports.

The real strengthened beyond 2 per dollar for the first time since July after the central bank yesterday sold $1.85 billion of foreign-exchange swap contracts at an auction. Policy makers swung in 2012 between selling currency swaps to prevent the real from falling too quickly and offering reverse currency swaps to protect exporters by keeping the real from strengthening beyond 2 per dollar.

Suzano fell 3.8 percent to 7.27 reais. Fibria Celulose SA, the world’s largest pulp producer, declined 1 percent to 24.40 reais.

Bull Market

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 that 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 15 percent.

Brazil’s benchmark equity gauge trades at 11.2 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.

Trading volume for stocks in Sao Paulo was 7.02 billion reais today, according to data compiled by Bloomberg. That compares with a daily average of 7.25 billion reais in 2012, 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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