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Bovespa Index Snaps Two-Day Drop as Cesp Rallies on Compensation

Nov. 28 (Bloomberg) -- The Bovespa index rose for the first time this week as Cia. Energetica de Sao Paulo led power companies higher after the regulator Aneel said it may increase the amount offered to compensate the utility for reduced rates.

Cia. Energetica de Minas Gerais and Centrais Eletricas Brasileiras SA also advanced as the MSCI Brazil/Utilities index gained the most among 10 industry groups. Mining companies MMX Mineracao & Metalicos SA and Vale SA followed commodities lower.

The Bovespa advanced 0.5 percent to 56,539.4 at the close of trading in Sao Paulo. Forty-four stocks rose on the gauge while 23 fell. The real weakened 0.5 percent to 2.0935 per U.S. dollar.

“Now that Aneel said it may revise the compensation offered to Cesp, maybe the amount to be paid to other utilities will also change,” Joao Pedro Brugger, who helps oversee 220 million reais at Leme Investimentos in Florianopolis, Brazil, said in a phone interview.

Cesp jumped 2.9 percent to 17.50 reais. Aneel’s press office said in an e-mailed response to questions that it’s revising the amount of compensation to be offered to the company. Newspaper O Estado de S.Paulo reported on the regulator’s decision earlier today.

Cemig added 2.7 percent to 24.80 reais, and preferred shares of Eletrobras climbed 1.8 percent to 8.44 reais.

Brazil proposed on Nov. 1 compensating utilities a total of about 19 billion reais for next year’s renewal of generation and transmission contracts that were to end between 2015 and 2017. Companies have until Dec. 4 to accept or reject the offer.

Commodities Slump

The Bovespa tumbled earlier as much as 1 percent as producers tracked commodities lower amid rekindled concern that the global slowdown will pare demand for raw materials.

Vale, the world’s largest iron-ore producer, retreated 1.4 percent to 35.22 reais. MMX lost 3.6 percent to 3.47 reais.

The Standard & Poor’s GSCI index of 24 raw materials lost as much as 1.4 percent after U.S. Senate Majority Leader Harry Reid said yesterday he was disappointed with congressional budget talks aimed at averting $607 billion in automatic tax increases and spending cuts in January. The measure pared the decline after comments by Republican House Speaker John Boehner and President Barack Obama fueled optimism lawmakers will be able to avert the so-called fiscal cliff.

“The so-called fiscal cliff in the U.S. is the latest in a long string of bad news we’ve seen in the global economy for quite some time, and it’s now the main source of concern for investors,” Fernando Goes, an analyst at Clear Corretora brokerage in Sao Paulo, said in a phone interview.

The Bovespa has climbed 7.7 percent from this year’s low on June 5 as stimulus from central banks around the world eased economic concern and borrowing costs at a record low in Brazil boosted equity demand.

Trading volume was 6.56 billion reais in stocks in Sao Paulo today, according to data compiled by Bloomberg. That compares with a daily average of 7.17 billion reais this year through Nov. 26, according to data compiled by the exchange.

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

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net

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