Bovespa Rises Second Week on Brazil Inflation, Commodities Gain

The Bovespa index gained for a second week as Brazilian inflation trailed forecasts and commodities rose after European leaders agreed to boost their rescue fund and tighten budget rules to stem the debt crisis.

Cyrela Brazil Realty SA Empreendimentos e Participacoes, Brazil’s second-biggest homebuilder by revenue, led gains by stocks linked to Brazil’s domestic demand. Oil producer Petroleo Brasileiro SA advanced the most in one week as crude prices climbed. Banco do Brasil SA, Latin America’s biggest bank by assets, rose after Chairman Nelson Barbosa said the lender doesn’t need to raise capital.

The Bovespa added 1.4 percent to 58,236.46 at the close of trading in Sao Paulo. The gauge gained 0.6 percent this week. Fifty-two stocks climbed on the gauge, while 14 fell today. The real strengthened 1.5 percent to 1.7981 per U.S. dollar.

“As far as current numbers show, inflation is not a matter for concern,” Renato Bandeira de Mello, head of equity trading at Futura Corretora, said by phone from Sao Paulo. “Investors are also pleased with the news coming from Europe.”

The first preview of the IGP-M report showed Brazil inflation was 0.04 percent this month through yesterday, according to the Rio de Janeiro-based Getulio Vargas Foundation. That compares to a median estimate for 0.42 percent among 17 economists surveyed by Bloomberg.

Consumer prices in Sao Paulo, Brazil’s biggest city, rose 0.49 percent in the four weeks ended Dec. 7, according to the Foundation Economics Research Institute. That compares to the median estimate of 0.58 percent among 19 economists polled by Bloomberg.

EU Summit

In Europe, leaders meeting in Brussels tightened deficit rules and agreed to boost their crisis-fighting war chest as much as 200 billion euros ($267 billion).

Oil rose after a report showed that confidence among consumers rose to a six-month high in the U.S., the world’s biggest crude consumer, and on speculation that Europe’s steps to tame its debt crisis may sustain demand. The Standard & Poor’s GSCI index of 24 raw materials climbed 0.2 percent.

Petrobras, as Petroleo Brasileiro is known, jumped 2.2 percent to 23.02 reais.

OGX Petroleo & Gas Participacoes SA, the oil company controlled by billionaire Eike Batista, gained 1.3 percent to 14.60 reais after Batista said the company will start crude production this month.

Banco do Brasil Gains

Banco do Brasil gained 2.2 percent to 24.20 reais after Chairman Barbosa, who is also deputy finance minister, said the federally controlled bank doesn’t need to increase capital. O Globo newspaper reported on Dec. 5 state-controlled banks including Banco do Brasil may issue new shares as part of plans by the government to boost capital at its financial institutions so they can meet cash requirements and continue making loans.

Suzano Papel & Celulose SA, Latin America’s second-largest pulp maker, climbed 0.7 percent to 7.19 reais after earlier tumbling as much as 2.5 percent. Chief Executive Officer Antonio Maciel Neto said today in Sao Paulo the company may sell shares or delay investments should its planned asset sales fail.

The Bovespa entered a bull market in October after gaining 22 percent from a two-year low on Aug. 8 as Brazil’s interest-rate cuts and speculation Europe was working toward solving its debt crisis buoyed demand for equities. The gauge is still down 16 percent this year on concern flagging global commodity demand and quickening inflation will hurt corporate earnings growth.

Brazil’s benchmark equity index trades at 10.4 times analysts’ earnings estimates, in line with the ratio for MSCI Inc.’s measure of 21 developing nations’ equities, weekly data compiled by Bloomberg show.

Traders moved 4.7 billion reais ($2.6 billion) in stocks in Sao Paulo today, data compiled by Bloomberg show. That compares with a daily average this year of 6.52 billion reais through Dec. 1, according to data from the exchange.

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