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Brazil’s Bovespa Advances on U.S. Jobs, Global Recovery Outlook

Brazil’s Bovespa stock index climbed for a sixth day as an increase in U.S. jobs and a forecast of higher growth in India bolstered optimism that the global economy is rebounding.

Petroleo Brasileiro SA rose as crude surged to the highest price in 17 months as service industries in the U.S. expanded at the fastest pace since May 2006. Metalurgica Gerdau SA, the parent company of Latin America’s biggest steelmaker, led gains on the Bovespa index as pending home sales in the U.S. rose the most since 2001. Duratex SA, a maker of materials for construction companies, climbed 1 percent on the prospect of increased demand from homebuilders.

“U.S. data came out very good, principally the home sales and ISM, which indicates an improving economy, and that’s being reflected in commodities and our own stock index,” said Fausto Gouveia, who helps manage 200 million reais ($114 million) in stocks at Legan Administracao de Recursos in Sao Paulo, referring to the Institute for Supply Management’s index of non-manufacturing businesses. “The market may stay above 70,000 after taking a long while to break through.”

The Bovespa index rose 0.2 percent to 71,289.68, extending its gain this year to 3.9 percent. Thirty-four stocks rose on the index while 25 fell. The Bovespa closed above 70,000 on March 31 for the first time since Jan. 13. The BM&FBovespa Small Cap index was little changed at 1,151.40. The real rose 0.2 percent to 1.7611 per dollar.

Emerging-Market Rally

Emerging-market stocks rallied for a seventh day, the longest winning streak in almost six months. India’s Finance Minister Pranab Mukherjee said the nation’s rate of economic growth is “impressive” and may accelerate to the fastest pace in three years.

The U.S., Brazil’s second-largest trade partner, added the most jobs in three years last month. American payrolls rose by 162,000, figures from the Labor Department showed on April 2, when markets in Brazil were closed. The March increase included 48,000 temporary workers hired for the 2010 federal census.

Service industries expanded in March at the fastest pace in more than three years, a sign the U.S. recovery is extending beyond manufacturing and starting to create jobs. Pending home sales rose in February, jumping 8.2 percent from the previous month, the biggest gain since October 2001.

Crude Climbs

Crude oil surged to the highest level in 17 months, rising 2.1 percent to $86.62 a barrel on the New York Mercantile Exchange.

State-controlled oil company Petrobras added 0.7 percent to 36.01 reais.

Metalurgica Gerdau climbed 2 percent to 37.84 reais. Gerdau, Latin America’s biggest steelmaker, rose 1.7 percent to 30.42 reais.

Duratex, a producer of wood panels and bathroom fixtures, rose 1 percent to 15.91 reais. Gafisa SA and Rossi Residencial SA led homebuilders higher.

“With all these construction projects set to begin, Duratex is rallying,” Gouveia said in a phone interview. Brazil’s government said last month it would help finance the construction of 2 million homes from 2011 to 2014, expanding the previous target of 1 million homes.

Gafisa, Brazil’s second-biggest real estate developer, rose 1.2 percent to 12.64 reais. Rossi added 1.3 percent to 13.14 reais. The government may auction long-term rent prices for houses built by private companies or allow non-governmental organizations to manage state-owned buildings, Folha de S. Paulo reported, citing Celso Carvalho, the Secretary for Urban Programs.

Interest Rates

Even Construtora e Incorporadora SA added 1.9 percent to 6.88 reais. The homebuilder reported 427 million reais of contracted sales in the first quarter of 2010 and started 255 million reais of new projects. That compares with 171 million reais of contracted sales and 87 million reais of new projects in the year-earlier period, according to Even’s Web site.

The Bovespa trades at 13.7 times analysts’ 2010 earnings estimates, compared with 16.1 times for Mexico’s Bolsa and 17.8 times for Chile’s Ipsa. The IGBC Index in Colombia is valued at 21.6 times profit estimates, Bloomberg data show. The Bovespa index trades at 17.8 times the reported profits of its companies after fetching 25.5 times in November, the most in almost six years, according to weekly data compiled by Bloomberg.

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