Ibovespa Gains as Monthly Drop Seen Hard to Sustain; Itau Rises

The Ibovespa climbed on speculation the biggest monthly drop in Brazil’s benchmark index since June would be hard to sustain.

Itau Unibanco Holding SA led financial stocks higher and contributed the most to the gauge’s advance. EDP-Energias do Brasil SA was the best performer among power utilities on the benchmark index after Valor Economico reported that energy prices are soaring because Brazil’s dry weather is depleting reservoirs used for hydropower.

The Ibovespa added 0.4 percent to 47,426.77 at 4:26 p.m. in Sao Paulo, paring the monthly drop to 8 percent. Thirty-nine of its 72 member stocks rose today. The real weakened 0.3 percent to 2.4175 per dollar.

“The Ibovespa has fallen so much in the past weeks that some stocks have reached a level that attracts buyers looking for bargain,” Fernando Goes, an analyst at the brokerage firm Clear Corretora, said in a phone interview from Sao Paulo. “Brazilian banks such as Itau are a good example. They have always found a way to deliver good results even in times when the country’s economy is not so good.”

Itau added 1.9 percent to 30.08 reais. The MSCI Brazil/Financials Index advanced 1.4 percent, the best performer among 10 industry groups. The MSCI Brazil/Utilities index gained 1 percent. Energias do Brasil increased 1.6 percent to 9.41 reais.

The Ibovespa has tumbled 16 percent from a bull-market high on Oct. 22 as inflation exceeded policy makers’ target for a third consecutive year and concern mounted that higher government spending will lead to a reduction in the country’s credit rating.

Trading volume of stocks in Sao Paulo was 5.8 billion reais yesterday, compared with a daily average of 6.2 billion reais this month, according to data from 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: Brendan Walsh at bwalsh8@bloomberg.net

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