• Lender Itau contributes the most to Ibovespa index’s gains
  • Commodity producers follow an advance in raw materials

Brazil’s benchmark Ibovespa index rose to the highest level in eight weeks as the government of Acting President Michel Temer said it aimed to cut the budget deficit next year.

All but 10 of the benchmark equity index’s 59 stocks rose. Lender Itau Unibanco Holding SA contributed the most to the gains. State-controlled oil producer Petroleo Brasileiro SA and miner Vale SA followed commodities higher. Raw-materials producers have a 21 weighting in the Ibovespa’s.

Brazil’s economic team, led by Finance Minister Henrique Meirelles, announced plans to reduce the nation’s budget deficit in 2017, a crucial step in its the recovery strategy after Brazil lost its investment-grade rating last year. The Ibovespa has gained 22 percent in 2016 on bets that the new government will succeed in regaining investor confidence by shoring up finances.

"The market feels much more confident now," Paulo Henrique Amantea, an analyst at Guide Investimentos in Belo Horizonte, Brazil. "The trend for stocks is positive."

The Ibovespa added 1.8 percent to 52,957.47 at 11:12 a.m. in Sao Paulo. Itau climbed 2.5 percent, Petroleo Brasileiro rose 3.3 percent and Vale advanced 2.7 percent.

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