The Ibovespa led gains among major stock benchmarks as a rally in oil above $60 bolstered the outlook for Petroleo Brasileiro SA’s offshore investments.
Petrobras, as the state-run oil company is known, extended a five-day advance to 14 percent. Vale SA, the world’s biggest iron-ore producer, climbed to a five-month high as iron ore increased. Itau Unibanco Holding SA, Latin America’s largest bank by market value, slid after increasing provisions for bad loans by 30 percent.
The Ibovespa added 1.2 percent to 58,051.61 at the close of trading in Sao Paulo. Oil surged on bets the biggest U.S. glut in 85 years will ease. Petrobras, which is at the center of Brazil’s largest graft probe, has said investments in pre-salt production are economically viable with crude above $45. Brazilian stocks rallied even as analysts surveyed by the central bank forecast Latin America’s largest economy will contract the most since 1990.
“Commodity gains are propelling Brazilian producers and supporting the Ibovespa,” Luiz Roberto Monteiro, a trader at brokerage firm Renascenca DTVM in Sao Paulo, said in a phone interview. “Still, prospects for the economy are very bleak this year, and companies’ results will suffer.”
Petrobras climbed 4.2 percent to 14.38 reais, the highest level since Nov. 5. Brazil is weighing changes to lure foreign companies into its high-cost deepwater region after a corruption scandal and fiscal mismanagement left its national oil company unable to fund projects. Chief Executive Officer Aldemir Bendine said last week that under current rules, any new pre-salt ventures would increase its debt.
Investors have also been piling into Petrobras shares after Bendine, who took over in February, announced plans to sell $13.7 billion in assets this year and next to cut debt. The oil producer reported its 2014 results April 22, ending a five-month debate on writedowns related to the graft scandal.
Vale added 5.2 percent to 20.30, extending a three-day gain to 19 percent. Iron ore rose $1.15, or 2 percent, to $58.70 a ton, according to a price index compiled by Metal Bulletin.
Itau retreated 1 percent to 38.57 reais. The bank also raised its 2015 forecast for soured-loan reserves to 15 billion reais to 18 billion reais from a February estimate of 13 billion reais to 15 billion reais.