Bovespa Rises to Seven-Week High as Vale Leads Producers Higher

The Bovespa index rose to a seven-week high as Vale SA led raw-material producers higher on optimism that a global economic recovery will boost demand for Brazil’s commodity exports.

Vale, the world’s largest iron-ore mining company, advanced to the highest in three months as the MSCI Brazil/Materials index rose the most among 10 industry groups. Cia. Siderurgica Nacional SA led gains among steelmakers. OGX Petroleo & Gas Participacoes SA and LLX Logistica SA dropped after billionaire Eike Batista denied a report saying he plans to sell stakes to the national development bank.

The Bovespa climbed 0.6 percent to 59,623.34 at the close of trading in Sao Paulo, the highest level since Oct. 18. Forty-four stocks rose on the measure while 21 fell. The real weakened 0.1 percent to 2.0787 per dollar. The Standard & Poor’s GSCI index of 24 raw materials rose 0.1 percent after advancing as much as 0.6 percent earlier after German investor confidence increased more than analysts estimated.

“We’ve been seeing signs of a recovery in the global economy, making investors more optimistic about the scenario for Brazilian exporters next year,” Lucas Brendler, who helps manage about 6 billion reais at Banco Geracao Futuro de Investimentos, said by phone from Porto Alegre.

Vale jumped 2 percent to 38.18 reais, the highest since Sept. 18. CSN, as Cia. Siderurgica is known, gained 2.1 percent to 11.50 reais, a one-month high.

German Confidence

Commodity producers account for 43 percent of the Bovespa’s weighting.

The ZEW Center for European Economic Research in Mannheim said its index of investor and analyst expectations, which aims to predict economic developments six months in advance, climbed to 6.9 from minus 15.7 in November. Economists forecast a gain to minus 11.5, according to the median of 38 estimates in a Bloomberg survey.

“The German confidence data helped to boost global stocks, and some of this optimism is spilling over Brazil, especially commodities producers,” Joao Pedro Brugger, who helps oversee 220 million reais at Leme Investimentos in Florianopolis, Brazil, said in a phone interview.

OGX, the fourth-heaviest weighted stock on the Bovespa index, fell 2.9 percent to 4.70 reais. LLX lost 1.3 percent to 2.31 reais.

“Batista’s companies rose a lot yesterday on the back of speculation that BNDES could bid, and after the denial they’re erasing some of those gains,” Brugger said.

Minerva, JBS

EBX Group, Batista’s holding company, said yesterday there’s no formal agreement to sell stakes in its units to Brazil’s national development bank, known as BNDES. Veja magazine reported on its website Dec. 8 that talks were continuing.

Beef producers Minerva SA and JBS SA tumbled after Russia said it may halt imports from Brazil after tests showed an animal in Parana state carried the agent that causes mad-cow disease.

Minerva SA tumbled 4.5 percent to 10.02 reais, the lowest price since Aug. 17. JBS lost 2.7 percent to 5.67 reais.

Russia’s food safety watchdog is considering a Brazilian beef import ban because of a potential mad-cow disease threat, said Alexei Alekseenko, spokesman for the service, known as Rosselkhoznadzor.

Test Results

The Brazilian Ministry of Agriculture said Dec. 7 that tests on a 13-year-old cow that died in the country’s southern Parana state in 2010 showed it carried the causing agent of bovine spongiform encephalopathy, the brain-wasting disease known as mad cow. The animal didn’t develop the illness nor did the agent trigger its death, which was caused by old age and organ failure, according to the ministry.

Japan, the world’s third-largest beef importer, said on Dec. 9 it halted purchases from Brazil.

The Bovespa has gained 14 percent from this year’s low on June 5 as stimulus from central banks around the world eased economic concern while borrowing costs at a record low in Brazil boosted demand for equities. The index trades at 11 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 7.58 billion reais stocks in Sao Paulo today, data compiled by Bloomberg show. That compares with a daily average of 7.19 billion reais this year through Dec. 10, according to data compiled by the exchange.