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Ibovespa Rises as OGX Rally Outweighs Homebuilder Drop

The Ibovespa rose for a fifth session as oil producer OGX Petroleo e Gas Participacoes SA led gains by companies owned by former billionaire Eike Batista, outweighing a decline in homebuilders.

MMX Mineracao e Metalicos SA, Batista’s mining company, rallied after Trafigura Beheer BV and Mubadala Development Co. agreed to buy a controlling stake in its iron-ore port in Rio de Janeiro state. Phone company Oi SA rose for a sixth day. Gafisa SA was the worst performer among homebuilders as traders raised bets for higher borrowing costs in Brazil amid signs the economic recovery is picking up.

The Ibovespa rose 1.5 percent to 54,980.64 at the close of trading in Sao Paulo, with 33 stocks lower and 39 higher. The real strengthened 0.2 percent to 2.1782 per dollar. Brazil’s retail sales climbed 0.9 percent in August from a month earlier, the national statistics agency said today. The median forecast of economists surveyed by Bloomberg was for a 0.2 percent increase.

“Stocks that have been weighing on the Ibovespa for some time, such as Eike’s companies, are not doing so bad now,” Fausto Gouveia, who helps manage 500 million reais at Legan Administracao de Recursos, said in a telephone interview. “One of the main issues for the Brazilian equity market from now on will be how high interest rates will go.”

Brazil’s central bank, led by President Alexandre Tombini, last week lifted the benchmark lending rate to 9.5 percent from 9 percent. Policy makers this year have raised borrowing costs the most among 49 economies tracked by Bloomberg, as they tried to slow inflation that has remained above the 4.5 percent target for the past three years.

OGX Surge

Swap rates, a gauge of expectations for interest-rate moves, increased in most contracts after the retail sales report was released. Gafisa fell 3.3 percent to 3.53 reais.

OGX, the fourth-heaviest weighted stock on the Ibovespa, jumped 48 percent to 34 centavos, contributing the most to the index’s advance. Lucas Brendler, who helps manage about 4 billion reais at Geracao Futuro Corretora in Porto Alegre, Brazil, said in an interview that there’s been “a lot of noise in the market, and one possibility is Eike leaving the controlling group.” Investor website InfoMoney attributed the surge to speculation the former billionaire would leave the company in a possible agreement with creditors.

MMX Deal

OGX’s press office in Rio de Janeiro didn’t immediately respond to an e-mailed request for comment.

MMX jumped 6.1 percent to 1.05 reais. Trafigura, the world’s second-biggest metals trader, and Abu Dhabi’s Mubadala sovereign wealth fund agreed to buy 65 percent of a unit of MMX that controls the Sudeste port in Rio de Janeiro state by paying $400 million and assuming debt, MMX said in a statement late yesterday.

Brazil’s benchmark equity gauge earlier fell as much as 0.2 percent as investors waited for U.S. lawmakers to reach a deal on the nation’s debt ceiling. The Standard & Poor’s 500 Index fell 0.7 percent at as Congressional leaders work on competing bills to raise the federal debt limit two days before the deadline.

“Everyone is waiting to see if a deal can be reached today,” Luciano Rostagno, the chief strategist at Banco Mizuho do Brasil in Sao Paulo, said in a phone interview. “Not to reach an agreement would endanger the U.S. recovery. There are signs that politicians are getting closer to some kind of accord, but until it happens for real, investors will be cautious.”

Odontoprev Sinks

Oi climbed 1.8 percent to 4.41 reais. The stock has gained 3 percent this month after the company agreed to merge with Lisbon-based parent Portugal Telecom SGPS SA to create a carrier with almost $17 billion in annual sales.

Odontoprev SA fell 5.4 percent to 9.37 reais after Banco Bradesco SA’s health insurance unit agreed to raise its stake in the dental-plan provider. Chief Executive Officer Randal Luiz Zanetti will be replaced by Mauro Figueiredo once the deal is concluded, according to a regulatory filing from Odontoprev.

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 down 15 percent in dollar terms this year, compared with a decline of 2.4 percent for the MSCI Emerging Markets Index of 21 developing nations’ equities.

Trading volume of stocks in Sao Paulo today was 8.92 billion reais, according to data compiled by Bloomberg. That compares with a daily average of 7.57 billion reais this year through Oct. 11, according to data compiled by the exchange.

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