Bovespa Index Rises as Brazilian Rate Outlook Lifts Rossi

The Bovespa index rebounded from a one-week low as Brazilian homebuilders rallied amid speculation that policy makers will maintain record-low borrowing costs.

Rossi Residencial SA (RSID3) rose the most on the benchmark after saying it will turn away from government-sponsored projects aimed at low-income families in favor of higher-end projects in its 2013-2015 business plan. Competitors Brookfield Incorporacoes SA (BISA3) and MRV Engenharia & Participacoes SA (MRVE3) also advanced.

The Bovespa climbed 0.5 percent to 56,152.14 at 10:26 a.m. in Sao Paulo. Forty-seven stocks gained on the gauge while 19 declined. Brazil’s swap rates on contracts due in January 2015 fell 0.04 percentage point to 8.45 percent after a report showed industrial production contracted more than forecast in February. The real appreciated 0.2 percent to 2.0170 per dollar.

“The industrial production figures came in significantly lower than expected, which makes investors price in a low probability of interest rates going up in the next policy meeting,” Gustavo Mendonca, an economist at Oren Investimentos, said by phone from Rio de Janeiro.

Industrial production contracted 3.2 percent in February from a year earlier, after growing a revised 5.5 percent in the prior month, Brazil’s statistics agency reported today. The median forecast of 25 analysts surveyed by Bloomberg was for output to shrink 2.4 percent.

Rossi added 4.3 percent to 3.18 reais. MRV climbed 1.4 percent to 8.51 reais. Brookfield rose 0.8 percent to 2.46 reais.

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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