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Ibovespa Posts Weekly Advance as Vale Rises on China Optimism

The Ibovespa posted a weekly advance as Brazilian exporters rose on signs of growth in China, the Latin American country’s top trading partner.

Vale SA, the world’s largest iron-ore producer, climbed the most in a month as prices for the raw material increased for a fourth day. Metalurgica Gerdau SA, the parent of Latin America’s biggest steelmaker, was the best performer on the MSCI Brazil/Materials Index. Retailer Cia. Brasileira de Distribuicao Grupo Pao de Acucar and homebuilder PDG Realty SA Empreendimentos e Participacoes dropped as traders raised bets on higher borrowing costs in Brazil.

The Ibovespa added 0.3 percent to 53,149.62 at the close of trading in Sao Paulo, extending its gain this week to 0.6 percent. The real climbed 0.2 percent at 5:26 p.m. local time to 2.1766 per dollar.

“Data in China keep pointing to strong economic activity, which is positive for Brazil,” Alvaro Bandeira, a partner at Orama Asset Management, said in a phone interview from Rio de Janeiro. “On the domestic side, Brazil still faces a lot of problems. Interest rates are rising, the real is really volatile, and all these issues end up messing with the equity market.”

Wholesale deliveries of cars and multipurpose and sport-utility vehicles in China climbed 21 percent to an eight-month high of 1.59 million units last month, according to the country’s state-backed association of vehicle manufacturers.

Vale, Gerdau

Vale rose 1.5 percent to 31.02 reais. Iron ore for immediate delivery rose 10 cents to $133.10 a ton, according to prices compiled by The Steel Index Ltd. Metalurgica Gerdau gained 3.3 percent to 22.51 reais.

Brazilian swap rates rose on speculation the central bank, led by its president, Alexandre Tombini, will raise the target lending rate to 10 percent after signaling this week that it will maintain the pace of borrowing-cost increases.

“We at the central bank are committed to bringing inflation down,” Tombini told reporters today in Washington.

Pao de Acucar fell 0.7 percent to 109.21 reais. PDG lost 4.7 percent to 2.23 reais.

Lupatech SA, a provider of oil equipment and services, tumbled 28 percent to 75 centavos after saying it missed a bond payment.

The Ibovespa entered a bull market Sept. 9 after rising 20 percent from this year’s low on July 3 through that day. The gauge is still down 18 percent in dollar terms this year, compared with a decline of 2.9 percent for the MSCI Emerging Markets Index of 21 developing nations’ equities.

Low Volatility

Trading volume on the Ibovespa was 31 percent lower than the average in the previous 10 days, data compiled by Bloomberg show. The gauge’s 30-day volatility, a measure of price swings, fell today to 18.783, the lowest since June 12, the data show.

Trading volume declined in the past few days as some investors avoided equities while U.S. lawmakers struggled to reach an agreement to raise the government’s debt ceiling, said Otavio Vieira, a partner at hedge fund Fides Asset Management.

“Lower volume also leads to lower volatility, with everyone waiting to see what’s going to happen in the U.S.,” Vieira said in a phone interview from Rio de Janeiro.

Senate Republicans said after a meeting at the White House that President Barack Obama is open to changing a tax on medical devices in the future as talks continue about ending a partial government shutdown and raising the debt limit.

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