Bovespa Stock Index Advances for Second Day on Earnings Growth

The Bovespa stock index advanced for the second day after companies including Vivo Participacoes SA reported earnings growth, blunting a decline for oil companies, which fell as crude prices retreated.

Vivo, Brazil’s biggest wireless carrier, gained the most in two months after it said fourth-quarter net income quadrupled from a year earlier. Petroleo Brasileiro SA and OGX Petroleo & Gas Participacoes SA dropped after crude prices fell on assurances from the U.S. and Saudi Arabia that they can compensate for any disruptions of Libyan shipments.

Brazil’s benchmark stock index rose 0.1 percent to 66,948.99 at the close of Sao Paulo trading at 4:15 p.m. New York time. Thirty-one stocks advanced on the index, while 34 declined. The real gained 0.6 percent to 1.6641 per U.S. dollar.

“Companies have reported good results overall,” said Rodrigo Mello, who helps manage 260 million reais ($156.4 million) as partner at Oren Investimentos in Rio de Janeiro. “And unrest in Libya will only be a serious problem if violence spreads to other oil-producer countries, causing a long-term increase in energy prices. So far, this is not the case.”

Vivo jumped 4.1 percent to 57.26 reais after gaining as much as 5.1 percent earlier. The company posted net income of 864.2 million reais in the fourth quarter of 2010. The average estimate of six analysts surveyed by Bloomberg was for adjusted profit of 523.8 million reais.

Klabin SA, Latin America’s biggest paper maker, rose 7.1 percent to 6.01 reais, the biggest gain since Dec. 1, after it returned to a profit and vowed to reduce costs. The company reported net income of 225 million reais in the fourth quarter, compared with a loss of 223 million reais a year earlier.

Sendas Stake

Cia. Brasileira de Distribuicao Grupo Pao de Acucar, Brazil’s biggest retailer, rose 0.8 percent to 61.50 reais after it said fourth-quarter profit increased 81 percent from a year earlier. Separately, the company also said it agreed to pay 377 million reais for the stake it doesn’t already own in supermarket chain Sendas Distribuidora SA.

Petroleo Brasileiro fell 1.2 percent to 28.37 reais. OGX Petroleo & Gas Participacoes slid 0.6 percent to 19.09 reais. Crude oil in New York retreated from the highest level in 29 months after President Barack Obama said the U.S. will be able to “ride out” a cut resulting from turmoil in Libya.

Saudi Arabia and other members of the Organization of Petroleum Exporting Countries said they won’t wait for an emergency meeting of the group to increase output, according to a person with knowledge of producer-nation policy.

Usiminas Falls

Libya, which pumps 1.6 million barrels a day of oil, is the ninth-largest producer among the 12 members of the Organization of Petroleum Exporting Countries, shipping most of its crude and fuels across the Mediterranean to Europe.

Usinas Siderurgicas de Minas Gerais SA fell 2.1 percent to 18.65 reais after it was cut to “underperform” from neutral at Bank of America Corp. The company known as Usiminas “lacks cost efficiency” as domestic prices trail international levels amid higher imports, analysts, including Felipe Hirai, wrote in a note to clients dated yesterday.

Cia. Siderurgica Nacional SA, Brazil’s third-biggest steelmaker, dropped 0.8 percent to 26.70 reais. Gerdau SA, Latin America’s largest steelmaker, declined 1.7 percent to 22.08 reais.

The Bovespa is down 3.4 percent this year on concern rising inflation will spur additional measures to restrict credit growth, overshadowing gains in oil and raw-material producers. The index trades for 10.9 times analysts’ earnings estimates, according to weekly data compiled by Bloomberg. That compares to a ratio of 13.7 for the Shanghai Composite Index, 7 for Russia’s Micex, and 17.3 for India’s Sensex.

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