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Bovespa Index Advances as Commodity Gain Lifts Vale; LLX Soars

Nov. 29 (Bloomberg) -- The Bovespa index climbed for a second day as a rally in commodities boosted Brazilian iron-ore producer Vale SA and LLX Logistica SA rose the most since 2009.

LLX posted the biggest gain on the gauge after General Electric Co. agreed to lease space at its Acu port. Steelmaker Cia. Siderurgica Nacional SA rose the most in 11 weeks as Banco Santander SA raised its recommendation to buy. Vale contributed the most to the stock gauge’s advance.

The Bovespa rose 2.3 percent to 57,852.53 at the close of trading in Sao Paulo. The central bank ended yesterday a streak of 10 consecutive rate cuts and held the benchmark Selic at a record low 7.25 percent. The real weakened 0.2 percent to 2.0987 per U.S. dollar. The Standard & Poor’s GSCI index of 24 raw materials added 1 percent.

“There’s a more optimistic stance in the global markets, which spreads to the Bovespa,” Luis Gustavo Pereira, an analyst at Futura Corretora in Sao Paulo, said in a phone interview. “But the index has circled around 57,000 for a while, and it’s having a hard time going beyond that level. We’ll have to wait and see if today’s gain is in fact a sign of recovery or if it’s just a correction.”

Global stocks rose after President Barack Obama said yesterday that Democrats and Republicans can agree before Dec. 25 on a framework for a U.S. budget deal to prevent $607 billion of tax increases and spending cuts from coming into effect in January. U.S. stocks pared gains after House Speaker John Boehner said “no substantive progress” has been made in talks in Washington.

CSN, as Cia. Siderurgica is also known, rallied 9.6 percent to 11.06 reais. Vale rose 3.9 percent to 36.6 reais.

LLX Jumps

LLX, the port developer controlled by billionaire Eike Batista, surged 28 percent to 2.22 reais after saying that GE’s Brazil unit agreed to lease space for 30 years at its Acu port.

The central bank reiterated yesterday in a statement after its policy meeting that it intends to leave the Selic unchanged for a “prolonged period” as it tries to keep inflation within its target range of 2.5 to 6.5 percent without derailing the economic recovery.

“Low interest rates are an incentive for people to sell bonds and move toward equities, so the latest rate cuts should be positive for the stock market in the long run,” Alexandre Ghirghi, a portfolio manager at Metodo Investimentos, said by phone from in Sao Paulo.

The Bovespa has climbed 10 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. The index trades at 10.7 times analysts’ earnings estimates for the next four quarters, in line with the ratio for MSCI Inc.’s measure of 21 developing nations’ equities, data compiled by Bloomberg show.

Trading volume was 7.74 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. 27, according to data compiled by the exchange.

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

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

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