Santander Leads Banks Up on Interest Rate View: Sao Paulo Mover

Banco Santander Brasil SA, the Brazilian Unit of Spain’s biggest lender, jumped the most in five weeks after Finance Minister Guido Mantega signaled that policy makers can increase interest rates to fight inflation.

Shares rose 2.8 percent to 14.56 reais at 12:25 p.m. in Sao Paulo after earlier gaining as much as 3.5 percent in the steepest intraday advance since Jan. 10. The MSCI Brazil/Financials Index rose 1.2 percent, the most among 10 industry groups on bets that higher benchmark rates will allow lenders to increase the rates they charge customers.

Mantega said that Brazil will do what it takes to fight inflation, adding that interest-rate increases are an option to rein in consumer prices. Swap rates, a gauge for rate expectations, jumped, with contracts due January 2014 rising the most since Dec. 7.

“The interest rate isn’t fixed. If you have more worrying inflation, it can move, but this is up to the central bank to decide,” Mantega said in an interview from Moscow today. “The government will do what it takes to keep inflation under control.”

Itau Unibanco Holding SA, Latin America’s biggest bank by market value, rose 1.6 percent to 34.17 reais. Banco Bradesco SA advanced 1.7 percent to 35.42 reais. State-controlled Banco do Brasil SA added 1 percent to 24.04 reais.

Brazil’s central bank board, led by Alexandre Tombini, kept the benchmark interest rate unchanged at 7.25 percent for a second straight meeting on Jan. 16.

Consumer prices in the country will rise 5.71 percent this year, according to the median estimate in a weekly central bank survey of about 100 economists published on Feb. 13, up from 5.68 percent the previous week. That was the sixth weekly increase to the estimates.

To contact the reporter on this story: Denyse Godoy in Sao Paulo at dgodoy2@bloomberg.net

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