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Ibovespa Advances Most in World on Brazilian Inflation Outlook

July 22 (Bloomberg) -- The Ibovespa posted the biggest gain among the world’s major equity benchmarks as online retailer B2W Cia. Digital led consumer stocks higher after economists cut their inflation forecasts for Brazil.

Phone company Oi SA surged a third day. Real-estate companies also advanced, led by Rossi Residencial SA. Steelmaker Cia. Siderurgica Nacional SA followed metals higher. MMX Mineracao e Metalicos SA, the iron-ore producer controlled by billionaire Eike Batista, rose the most in one week. Oil company HRT Participacoes em Petroleo SA tumbled to a record low after saying that it failed to find oil in a well drilled in Namibia.

The Ibovespa added 2.5 percent to 48,574.09 at the close of trading in Sao Paulo. Sixty-nine of the 71 stocks on the gauge rose. Mexico’s IPC and China’s Shanghai Composite each added 0.6 percent. The Standard & Poor’s 500 gained 0.2 percent. Economists covering Brazil lowered their forecasts for inflation, a central bank survey showed today, reducing prospects for steeper increases in interest rates.

“The latest data available suggest that inflation is slowing down a bit,” Gustavo Mendonca, who helps manage 1 billion reais as an economist at Saga Capital, said by phone from Rio de Janeiro. “It’s still a matter of concern for sure, but a bit less than it was.”

B2W jumped 8 percent to 11.65 reais, while Oi jumped 16 percent to 4.59 reais. Rossi climbed 6.6 percent to 2.90 reais. CSN advanced 5 percent to 6.30 reais. Trading volume on the Ibovespa was 24 percent lower than the average in the previous 30 days, according to data compiled by Bloomberg.

Government Spending

HRT tumbled 15 percent to 1.71 reais. The company said in a regulatory filing that it concluded the drilling of well Murombe-1 without finding oil, spurring UBS AG’s analyst Lilyanna Yang to cut the stock to sell.

Brazil’s government is cutting 10 billion reais ($4.5 billion) in spending to meet its 2013 budget target and is reducing this year’s economic growth forecast to 3 percent, Finance Minister Guido Mantega said today.

Banco Bradesco SA added 3.7 percent to 28.79 reais. The shares dropped as much as 1.7 percent in the first hour of trading after the lender reported second-quarter net income that fell short of analysts’ forecasts.

Brazil’s real climbed 0.6 percent to 2.2332 per dollar at 5:35 p.m. local time.

The Ibovespa slumped 22 percent this year through July 19, wiping out $236 billion from the value of Brazilian equities, according to data compiled by Bloomberg. Brazil’s main equity gauge trades at 12.1 times analysts’ earnings estimates for the next four quarters, compared with 10.3 for the MSCI Emerging Markets Index of 21 developing nations’ equities.

‘Bounce back’

Brazilian stocks have room to rebound after this year’s slump amid speculation that central banks around the world will keep policies aimed to boost economic growth, said Alvaro Bandeira, a partner at Rio de Janeiro-based Orama Asset Management.

“The Ibovespa has underperformed most markets for a long time, and it’s now trying to bounce back,” Bandeira said in a phone interview. “Equities can perform better, bolstered by a better external outlook.”

Industrial metals advanced as data showed that sales of previously owned houses in the U.S. unexpectedly dropped in June, spurring speculation that the Federal Reserve will take longer to scale back its bond-purchasing program. The Bloomberg Base Metals 3-Month Price Commodity Index rose 0.9 percent.

MMX jumped 9.6 percent to 1.49 reais. Iron ore producer Vale SA climbed 1.9 percent to 28.45 reais, the highest level in one month.

Trading volume for stocks in Sao Paulo was 5.59 billion reais today, according to data compiled by Bloomberg. That compares with a daily average of 7.77 billion reais this year through July 18, 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 at papadopoulos@bloomberg.net

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