Ibovespa Leads World Equity Gains on Localiza Profit

(Corrects time period for economic activity index in seventh paragraph.)

The Ibovespa rose the most among the world’s stock gauges as Localiza Rent a Car SA’s earnings spurred optimism about the outlook for corporate profits and OGX Petroleo e Gas Participacoes SA surged.

OGX, the oil company founded by Eike Batista, gained the most on record after O Estado de S.Paulo reported that the company will receive $200 million from a group of U.S. investors it didn’t identify to fund its projects. Raw-material companies including Cia. Siderurgica Nacional SA rose as commodities advanced amid speculation lawmakers in the U.S. will agree on a deal to raise the government’s debt ceiling.

The Ibovespa climbed 2.1 percent to 56,126.09 at 11:54 a.m. in Sao Paulo, the most among 94 stock gauges tracked by Bloomberg. Thirty-one of the benchmark’s 73 member stocks gained. The real rose 0.8 percent to 2.16165 per dollar. Localiza, the first member of the gauge to release third-quarter results, posted adjusted net income of 102.1 million reais, exceeding the average estimate of 92.3 million reais among analysts surveyed by Bloomberg.

“This earnings season could be a driver to push the Ibovespa higher,” Otavio Vieira, a partner at hedge fund Fides Asset Management, said in a phone interview from Rio de Janeiro. “Everyone is waiting to see what will happen in the U.S. and the debt ceiling, but once this is over, earnings will be the main thing to watch in Brazil.”

Economic Activity

Localiza added 2.8 percent to 36.14 reais. The company, whose profit increased 43 percent from a year earlier, has reported earnings that topped forecasts for four straight quarters, data compiled by Bloomberg show. The stock is up 1.9 percent this year.

The company “is proving that its earnings continue to grow at a double-digit rate even in a year of increasing interest rates and lower operating margins,” Banco Itau BBA SA analysts including Renata Faber wrote in a note to clients.

Brazil’s economic activity index, a proxy for gross domestic product, increased 1.32 percent in August from a year earlier, the central bank said today. The median estimate among economists surveyed by Bloomberg was for 1.5 percent growth.

OGX surged 50 percent to 51 centavos, extending a three-day rally to 143 percent. With the $200 million the company is raising, production in Tubarao Martelo field may start in mid-November, O Estado reported, without saying where it got the information. OGX’s press office didn’t respond to a request for comment from Bloomberg News.

Gafisa’s Sales

CSN, as Cia. Siderurgica is known, added 2.5 percent to 11.72 reais. The Standard & Poor’s GSCI index of 24 raw materials rose 0.4 percent. U.S. Senate leaders are resuming talks today after the House of Representatives scrapped a vote on its plan to suspend the debt limit until February.

Homebuilder Gafisa lost 2.8 percent to 3.43 reais. The company logged a 22 percent drop in booked sales during the third quarter, according to preliminary results in a regulatory filing posted after the close of trading yesterday.

The Ibovespa entered a bull market Sept. 9 after rising 20 percent from this year’s low on July 3 through that day. The gauge is down 13 percent in dollar terms this year, compared with a decline of 2.3 percent for the MSCI Emerging Markets Index of 21 developing nations’ equities.

Trading volume of stocks in Sao Paulo yesterday was 9.53 billion reais, compared with a daily average of 7.56 billion reais this year through Oct. 14, 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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