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Ibovespa Rises From 10-Week Low as PDG Advances on Rate Outlook

The Ibovespa rose from the lowest level in 10 weeks as homebuilder PDG Realty SA Empreendimentos e Participacoes gained amid speculation that policy makers will limit interest-rate increases to support Brazil’s economy.

State-controlled oil company Petroleo Brasileiro SA advanced after agreeing to sell assets in Peru to PetroChina Co. for $2.6 billion. Iron-ore producer Vale SA led declines among commodity exporters on concern that China’s government isn’t doing enough to bolster the world’s second-largest economy.

The Ibovespa gained 0.8 percent at the close of trading in Sao Paulo with 47 of its 72 member stocks higher. The real fell 0.1 percent to 2.3350 per dollar at 5:23 p.m. local time. Brazilian swap rates dropped on most contracts after a report today showed retail sales expanded at a slower pace than forecast in September.

“The outlook for growth is getting worse, especially when it comes to domestic consumption, which should make the central bank end the monetary tightening cycle soon,” Gustavo Mendonca, an economist at Saga Capital, said by phone from Rio de Janeiro.

Brazil’s central bank, led by President Alexandre Tombini, has increased the benchmark lending rate this year by 2.25 percentage points, the most among 49 major world economies tracked by Bloomberg, to curb inflation that has remained above the government’s 4.5 percent target since 2010. Analysts in a weekly central bank survey have cut their economic growth forecast for 2013 to 2.5 percent from 3.26 percent at the start of the year.

China Economy

Swap rates on the contract due in January 2015, the most traded today, fell 10 basis points, or 0.1 percentage point, to 10.86 percent. PDG Realty rose 4.6 percent to 1.81 reais, the best performer on the Ibovespa. The BM&FBovespa Real Estate Index rose 2.6 percent, the biggest one-day gain in eight weeks.

Oi SA, the second-worst performing telecommunications service provider in Latin America this year, rose 1.7 percent to 3.59 reais after analysts at Banco Bradesco SA’s brokerage unit said quarterly expenses that were 5.8 percent below their estimate show that the company’s turnaround plan is starting to work.

In China, Brazil’s top trading partner, officials refrained from providing details on economic policy shifts in a communique yesterday after the Communist Party’s Central Committee meeting. The nation will make markets “decisive” in allocating resources, while the state will remain “dominant” in the economy, according to the document.

Vale fell the most on the MSCI Brazil/Materials Index, dropping 1.1 percent to 32.06 reais.

Brazil’s main equity index entered a bull market Sept. 9 after rising 20 percent from this year’s low on July 3 through that day. The gauge has since pared gains to 16 percent.

Trading volume of stocks in Sao Paulo was 7.61 billion reais today, data compiled by Bloomberg show. That matches thhe daily average this year through Oct. 22, according to the latest data available from the exchange.

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