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Ibovespa Rallies as Vale Advances Amid Increases in Commodities

Feb. 6 (Bloomberg) -- The Ibovespa climbed the most since September as industrial metals, oil and other commodities gained, lifting Brazilian raw-material producers including mining company Vale SA.

Steelmaker Cia. Siderurgica Nacional SA rose to a one-week high. Electricity distributor Light SA advanced for the first time in four days after a government official said Brazilian generators can supply enough power to meet demand during the World Cup. All 10 subgroups on the MSCI Brazil Index rose.

The Ibovespa jumped 2.4 percent to 47,738.09 at the close of trading in Sao Paulo, with 64 of its 72 members higher. The real strengthened 0.9 percent to 2.3802 per U.S. dollar at 5:20 p.m. local time. The MSCI All Country World Index rose 1.2 percent after a report showed applications for U.S. unemployment benefits fell for the first time in three weeks.

“With things getting better in the external outlook, there’s a decline in risk aversion that could boost equities,” Luciano Rostagno, the chief strategist at Banco Mizuho do Brasil in Sao Paulo, said in a phone interview. “An improvement in the outlook for the global economy, which supports commodities, is one of the only hopes for Brazilian equities to perform a bit better.”

The Standard & Poor’s GSCI index of 24 raw materials rose 0.4 percent as oil advanced following a report showing that U.S. stockpiles declined. Commodity producers account for 35 percent of the Ibovespa’s weighting, according to data compiled by Bloomberg.

Vale climbed 2.9 percent to 30.80 reais, contributing the most to the Ibovespa’s advance. CSN, as Cia. Siderurgica is known, gained 5.7 percent to 11.50 reais.

Electricity Demand

Light jumped 4.4 percent to 18.41 reais after falling 7.5 percent in the previous three days. Brazil won’t face power shortages during the World Cup soccer tournament scheduled to start in June, Deputy Energy Minister Marcio Zimmermann said. Blackouts affected 6 million people this week as a heat wave pushed up demand.

“We have a group of people working on the World Cup, and we don’t see additional demand because it will be cooler with less air conditioning use,” Zimmermann said yesterday in an interview in Brasilia.

Brazil’s benchmark equity gauge has tumbled 15 percent from a bull-market high on Oct. 22 as inflation exceeded policy makers’ target for a third consecutive year and concern mounted that higher government spending will lead to a reduction in the country’s credit rating.

Trading volume of stocks in Sao Paulo today was 7.34 billion reais, data compiled by Bloomberg show. That compares with a daily average of 6.3 billion reais this year, according to data from 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: Brendan Walsh at bwalsh8@bloomberg.net

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