Ibovespa Rises as CSN Leads Brazilian Steelmaker Rally on China

The Ibovespa rose to a one-month high as Cia. Siderurgica Nacional SA led gains in steelmakers on speculation that China, Brazil’s top trading partner, will take measures to shore up growth.

Companies controlled by billionaire Eike Batista including LLX Logistica SA (LLXL3) and MMX Mineracao e Metalicos SA were among the best performers on the benchmark index. Duratex SA (DTEX3), a maker of wood panels and metal fixtures including faucets, climbed after second-quarter profit beat analysts’ estimates. Phone company Oi SA snapped a three-day rally.

The Ibovespa climbed 0.5 percent to 48,819.52 at the close of trading in Sao Paulo. Thirty-six stocks rose on the gauge while 33 dropped. The real appreciated 0.9 percent to 2.2132 per dollar at 5:28 p.m. local time. Chinese stocks gained as Beijing News cited Premier Li Keqiang as saying at a recent meeting with economists that the country’s “bottom line” for growth is 7 percent.

“The comments from Li Keqiang put investors in a better mood, given how much Brazil depends on China,” Luis Gustavo Pereira, an analyst at Futura Corretora brokerage, said by phone from Sao Paulo. “A stronger real is also good in terms of keeping inflation under control, at least for now.”

CSN, as Siderurgica Nacional is also known, advanced 3 percent to 6.49 reais. Gerdau SA, another steelmaker, added 2.6 percent to 14.27 reais.

‘Fire Sale’

LLX, Batista’s port developer, added 8.7 percent to 1 real. MMX jumped 12 percent to 1.67 reais. OGX Petroleo & Gas Participacoes SA gained 1.9 percent to 54 centavos. The billionaire is expected to offer most assets for sale, triggering interest from buyers that may include Singapore-based Keppel Corp. and Duesseldorf, Germany-based EON SE, according to UBS AG.

Batista’s holding company, EBX Group Co., “seems to us to be in such financial difficulty that suggestions of a fire sale appear to make sense,” UBS analysts including Lilyanna Yang wrote in the note to clients titled, “Is there anything left for EBX investors?”

EBX and EON declined to comment. E-mail messages sent after regular working hours in Asia to Keppel press officials weren’t answered.

Duratex climbed 4.6 percent to 14.07 reais, the highest since June 3. Adjusted net income rose to 130.7 million reais ($58.8 million) from a year earlier, according to data compiled by Bloomberg after the company released results yesterday after the close of markets. That compares with an average estimate of 129 million reais among four analysts surveyed by Bloomberg.

Oi sank 4.1 percent to 4.40 reais, after gaining 32 percent in the previous three sessions.

Trading Volume

The Ibovespa slumped 20 percent this year through yesterday, wiping out $218 billion from the value of Brazilian equities, according to data compiled by Bloomberg. Brazil’s main equity gauge trades at 12.3 times analysts’ earnings estimates for the next four quarters, compared with 10.5 for the MSCI Emerging Markets Index of 21 developing nations’ equities.

Trading volume for stocks in Sao Paulo was 5.67 billion reais today, according to data compiled by Bloomberg. That compares with a daily average of 7.74 billion reais this year through July 19, 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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