Ibovespa Snaps Three-Day Decline as Rossi Advances on Inflation

The Ibovespa advanced for the first time in four days as Rossi Residencial SA (RSID3) led homebuilders higher after a report eased concern that inflation will hurt Brazil’s recovery.

MMX Mineracao & Metalicos SA (MMXM3), Eike Batista’s iron-ore unit, rallied after people with direct knowledge of the matter said Mubadala Development Co. joined Trafigura Beheer BV to bid for the company. Banco do Brasil SA, Latin America’s biggest bank by assets, rose after it was rated the equivalent of buy in new coverage at JPMorgan Chase & Co.

The Ibovespa added 0.4 percent to 50,078.07 at 10:29 a.m. in Sao Paulo, with 60 of 71 stocks advancing. The real fell 0.8 percent to 2.3651 per dollar, extending its three-month drop to 11 percent. The IGP-M index of wholesale, construction and consumer prices rose 0.15 percent in the month through Aug. 20, after a previous reading of 0.26 percent, the Getulio Vargas Foundation reported.

“Investors overreacted a little bit to the currency drop, making some stocks cheap,” Joao Pedro Brugger, a portfolio manager at Leme Investimentos, said in a phone interview from Florianopolis, Brazil. “With the real depreciating, people became more concerned about the outlook for inflation and interest rates. These risks exist, but I don’t think it will have such a big impact on companies like homebuilders, which have suffered a lot lately.”

Rossi added 1.5 percent to 2.73 reais, paring losses in the past three months to 28 percent. MMX rose 1.5 percent to 2.02 reais. Banco do Brasil climbed 1 percent to 22.33 reais.

Brazil’s central bank yesterday increased its key interest rate by a half-percentage point for a third straight meeting, setting it at 9 percent.

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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