Bovespa Gains Most Since July as Petrobras Soars on Diesel Price

The Bovespa index surged the most since July, led by a rally in Petroleo Brasileiro SA after it unexpectedly raised diesel prices by 5 percent.

Petrobras, as Brazil’s state-controlled oil company is known, jumped the most since December 2008, making it the biggest contributor to the gauge’s rise. Materials exporters surged as Usinas Siderurgicas de Minas Gerais SA and Vale SA climbed at least 6 percent. Homebuilder Rossi Residencial SA and phone service provider Tim Participacoes SA led advances among companies that depend on consumers after inflation unexpectedly slowed in February, easing concern rising prices may hurt the economic recovery.

The Bovespa climbed 3.6 percent to 57,940.14 at the close of trading in Sao Paulo. Sixty-two stocks rose on the gauge while seven fell. Brazil’s IGP-DI index of wholesale, construction and consumer prices rose 0.20 percent in February, below the 0.35 percent median forecast of economists surveyed by Bloomberg.

“Every increase on diesel or gas prices is extremely positive for Petrobras, since it allows for a direct gain in revenue without any additional cost,” Oswaldo Telles, an equity analyst at Banco Espirito Santo SA, wrote in a research note to clients today. “This increase will have a strong positive effect on the shares.”

Petrobras jumped 9 percent to 18.05 reais, with trading volume about 2.6 times the daily average, data compiled by Bloomberg show.

Usiminas gained 7.3 percent to 10.34 reais. Vale rose 6 percent to 35.83 reais, the biggest jump since April.

Inflation Slows

Rossi advanced 6.4 percent to 3.47 reais. Tim, Brazil’s second-biggest mobile-phone operator by market share, added 3.4 percent to 8.85 reais.

“The IGP-DI index slowed in February, which could be good in the short term, although the outlook for inflation going forward is still challenging,” Alvaro Bandeira, a partner at Orama Asset Management, said by phone from Rio de Janeiro.

Cia. de Bebidas das Americas, the Brazilian unit of Anheuser-Busch Inbev NV, gained 2.6 percent to 90.14 reais.

ALL America Latina Logistica rose 1.8 percent to 9.87 reais. The company plans to bid for ports in Santos and in southern states of Brazil, newspaper Valor Economico reported today, citing Chief Financial Officer Rodrigo Campos.

Relative Value

The Bovespa has dropped 8.5 percent from this year’s high on Jan. 3 on concern that accelerating inflation may curb Brazil’s economic recovery and the government’s interventionist policies may hurt profits in industries including utilities and energy. The MSCI BRIC Index of shares in Brazil, Russia, India and China has slid 3.1 percent over the same period.

Brazil’s benchmark equity gauge trades at 11.7 times analysts’ earnings estimates for the next four quarters, compared with 10.6 for the MSCI Emerging Markets Index of 21 developing nations’ equities, according to data compiled by Bloomberg.

Trading volume for stocks in Sao Paulo was 9.46 billion reais today, according to data compiled by Bloomberg. That compares with a daily average of 7.56 billion reais this year through March 1, according to data compiled by the exchange.

Before it's here, it's on the Bloomberg Terminal.