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Ibovespa Heads for Weekly Gain as Rousseff Seen Facing Runoff

The Ibovespa headed for its second consecutive weekly rally after polls showed President Dilma Rousseff’s lead over her main contender narrowed, adding to speculation that she will face a runoff in the October election.

State-controlled oil company Petroleo Brasileiro SA was one of the best performers today. BM&FBovespa SA, the operator of Latin America’s biggest exchange, fell to a one-week low as quarterly revenue trailed analysts’ estimates.

The benchmark index increased 0.7 percent to 53,361.96 this week at 12:28 p.m. in Sao Paulo, entering a bull market after completing a 20 percent climb from a low on March 14. The gauge was down 0.1 percent today as 31 stocks rose while 39 fell. The real lost 0.3 percent to 2.2218 per dollar.

Rousseff’s support among voters was little changed at 37 percent compared with 38 percent in April, according to a poll on Folha de S. Paulo’s website today. Backing for Aecio Neves, a senator with the Brazilian Social Democracy Party, increased to 20 percent from 16 percent.

“Politics runs the show on Ibovespa these days,” Sandro Fernandes, a trader at the brokerage firm Geraldo Correa, said in a phone interview from Belo Horizonte, Brazil. “Polls showing that Dilma may not win the election in the first round are boosting state-controlled companies’ stocks on expectation that a new government would change their management.”

Rousseff has seen her popularity battered in polls over the past month amid accelerating inflation and stagnant economic growth. A Sensus survey published by IstoE magazine on May 3 showed she would win 35 percent of the vote, compared with a combined 34.7 percent for Neves and former Pernambuco state Governor Eduardo Campos. A candidate needs to have more than 50 percent of the valid votes to avoid a runoff.

Inflation Report

Stocks rose earlier today as data showing consumer prices climbed less than forecast bolstered bets the central bank will limit further increases in borrowing costs.

Inflation as measured by the benchmark IPCA index decelerated to 0.67 percent from 0.92 percent in March, the national statistics agency said today in Rio de Janeiro. That was slower than the 0.79 median forecast from 45 analysts surveyed by Bloomberg. Annual inflation quickened to 6.28 percent from 6.15 percent, marking its fastest rate since June.

Petrobras advanced 1.4 percent to 18.13 reais. BM&FBovespa declined as much as 2.7 percent to 11.41 reais in its biggest intraday drop since April 25.

Hypermarcas SA, the makers of consumer goods from diapers to over-the-counter drugs, added 1.5 percent to 17.84 reais. It had the biggest gain on the MSCI Brazil/Consumer Staples index, which rose 0.2 percent. Petrobras rallied on speculation a change in government will reduce intervention in state-run companies.

The Ibovespa entered the bull market on May 7.

Trading volume of stocks in Sao Paulo was 6.6 billion reais yesterday, compared with a daily average of 6.8 billion reais this year, according to data from the exchange.

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