Ibovespa Snaps Two-Day Drop as Vale Gains on China Stimulus Bets

The Ibovespa rose after a two-day slump as raw-material producers rallied on speculation China will take further steps to maintain growth, boosting the prospects for exports to Brazil’s top trading partner.

Iron-ore producer Vale SA (VALE5) gained after yesterday posting its biggest one-day plunge since 2011. Localiza Rent a Car SA climbed after reporting first-quarter earnings that exceeded analysts’ estimates. Steelmaker Cia. Siderurgica Nacional SA (CSNA3) jumped after announcing a plan to buy back as many as 67.9 million shares through May 23.

The Ibovespa rose 1.5 percent to 51,200.56 at the close of trading in Sao Paulo, with 63 of its 73 members higher. The real weakened 0.3 percent to 2.2401 per dollar at 5:20 p.m. local time. The Standard & Poor’s GSCI index of 24 raw materials gained 0.2 percent, supporting the commodity producers that account for about a third of the Ibovespa’s weighting.

“Speculation about China is setting the tone in today’s session,” Pedro Galdi, the chief analyst at brokerage firm SLW Corretora, said by phone from Sao Paulo. “We also have some positive corporate news, such as Localiza’s earnings. Companies that depend on domestic consumption are expected to post good first-quarter results.”

Vale, whose top export market is China, added 1 percent to 28.15 reais after sinking 7.5 percent yesterday. CSN, as Cia. Siderurgica is known, rose 2.3 percent to 9.16 reais.

China’s gross domestic product increased 7.4 percent in the first quarter from a year earlier, the statistics bureau in Beijing reported. While exceeding the 7.3 percent median forecast of economists surveyed by Bloomberg, the expansion was the smallest in six quarters.

Swap Rates

Localiza climbed 2.4 percent to 34.55 reais. The company posted adjusted net income of 105.8 million reais in the first quarter, which compared with the average estimate of 96 million reais among analysts surveyed by Bloomberg.

Brazilian swap rates dropped on shorter-term contracts, signaling traders are paring bets for higher borrowing costs in Brazil and boosting stocks that are linked to credit growth. Gafisa SA (GFSA3) jumped 5.2 percent to 3.66 reais, leading a rally among homebuilders.

The Ibovespa entered a bear market March 14 after falling 20 percent from its October high through that day. The gauge has since gained 14 percent as state-owned companies including Centrais Eletricas Brasileiras SA (ELET6) rebounded.

Trading volume of stocks in Sao Paulo today was 6.2 billion reais, according to data compiled by Bloomberg. That compares with a daily average of 6.6 billion reais this year, according to data from the exchange.

To contact the reporter on this story: Ney Hayashi in Sao Paulo at ncruz4@bloomberg.net

To contact the editors responsible for this story: Brendan Walsh at bwalsh8@bloomberg.net Richard Richtmyer

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