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Bovespa Rises to 12-Week High as Commodities Support Usiminas

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Dec. 18 (Bloomberg) -- The Bovespa index rose to a 12-week high as raw-material producers advanced amid optimism that U.S. lawmakers will agree on a budget, easing concern that growth in Brazil’s second-biggest trading partner will falter.

Iron-ore producer Vale SA contributed the most to the gauge’s advance, and steelmaker Usinas Siderurgicas de Minas Gerais SA was the best performer. Sugar and ethanol producer Sao Martinho SA advanced to the highest since January 2011 after saying it bought land and warehouses from Biosev SA. The MSCI Brazil/Materials index rose the most among 10 industry groups.

The Bovespa climbed 1.5 percent to 60,460.73 at the close of trading in Sao Paulo, the highest since Sept. 26. The gauge is up 6.5 percent this year. The Standard & Poor’s GSCI index of 24 raw materials added 0.5 percent today.

“The budget talks in the U.S. are the most important issue in the market in the final weeks of this year, and signs that a deal may be closer make investors a bit more optimistic about the outlook for the world economy,” Pedro Galdi, the chief strategist at Sao Paulo-based brokerage SLW Corretora, said in a phone interview.

U.S. President Barack Obama and House Speaker John Boehner are negotiating to avert more than $600 billion in tax increases and spending cuts set to start in January, known as the fiscal cliff. Obama made a new offer yesterday that would raise $1.2 trillion in taxes in the next decade and cut $1.22 trillion in spending, according to a person familiar with the talks.

Usiminas jumped 7.5 percent to 12.32 reais. Vale advanced 1.7 percent to 41 reais.

Global Outlook

Once a deal is struck on the U.S. budget, the outlook for the global economy becomes clearer, which should benefit Brazil, said Marcio Cardoso, a partner at Sao Paulo-based brokerage Titulo Corretora de Valores.

“With major countries posting a stronger recovery, the odds of Brazil growing faster too would increase,” Cardoso said in a phone interview. “Investment flows to Brazil would likely increase, commodities would trade higher, there’d be many elements boosting economic activity.”

Sao Martinho rose 4 percent to 26 reais. The company said it paid 199.6 million reais to Biosev for assets.

HRT Jumps

HRT Participacoes em Petroleo SA rose 0.6 percent to 4.92 reais after jumping as much as 5.1 percent earlier. The company said in a regulatory filing it set a six-month timeline for jointly developing gas fields in the Amazon region with Petroleo Brasileiro SA and TNK-BP Ltd.

The real strengthened 0.5 percent to 2.0890 per U.S. dollar, its first gain in four sessions, after Brazil’s central bank eased reserve requirements on bets against the dollar to boost the local currency.

The Bovespa has climbed 15 percent from this year’s low in June as stimulus from central banks around the world eased concern about an economic slowdown while record low benchmark lending rates has pushed some investors to move into stocks from fixed income.

The index trades at 11.2 times analysts’ earnings estimates for the next four quarters, in line with the ratio for MSCI’s measure of 21 developing nations’ equities, data compiled by Bloomberg show.

Trading volume was 6.86 billion reais in stocks in Sao Paulo today, data compiled by Bloomberg shows. That compares with a daily average of 7.28 billion reais this year through Dec. 17, according to data compiled by the exchange.

To contact the reporters on this story: Ney Hayashi in Sao Paulo at ncruz4@bloomberg.net; Denyse Godoy in Sao Paulo at dgodoy2@bloomberg.net

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

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