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Ibovespa Futures Rise After Index Tumbled Into Bear Market

Ibovespa futures rose, a sign the gauge may rebound after sinking more than 20 percent from a peak in January, before Brazil announces measures to curb inflation while boosting demand.

Biofuel producer Cosan SA Industria e Comercio (CSAN3) may move after announcing a program to buy back as many as 4.6 million shares in one year. Papermaker Klabin SA (KLBN3) may be active after approving a public offering of as much as 1.7 billion reais ($800 million) in units.

Ibovespa futures contracts expiring in June advanced 1.2 percent to 50,305 at 9:06 a.m. in Sao Paulo. The real strengthened 0.2 percent to 2.1279 per dollar. The Standard & Poor’s GSCI index of 24 raw materials added 0.1 percent, boosting the prospects for Brazilian raw materials exporters.

The Brazilian benchmark stock gauge fell 21 percent from its Jan. 3 bull market high to 49,769.93 at the close of trading yesterday on concern accelerating inflation may curb Brazil’s economic recovery and the government’s interventionist policies will hurt profit in industries including utilities and energy.

The gauge’s 14-day relative index plunged to 22. A reading below the 30 level indicates to some analysts that a security or index is oversold and poised to rebound.

President Dilma Rousseff will announce today subsidized credit for the purchase of furniture and home appliances, as the government seeks to reverse slowing consumption. Rousseff’s administration is also considering budget spending cuts and a credible fiscal target in order to show commitment to fiscal austerity, newspaper Valor Economico reported today, citing unnamed people at the government.

Brazil’s benchmark equity gauge trades at 11.9 times analysts’ earnings estimates for the next four quarters, compared with a multiple of 10.4 for the MSCI Emerging Markets Index of 21 developing nations’ equities.

Trading volume for stocks in Sao Paulo was 8.3 billion reais yesterday, compared with a daily average of 7.7 billion reais this year through June 11, according to data compiled by the exchange.

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

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