Bovespa Index Advances as Demand Optimism Boosts Builders

The Bovespa index rose as speculation Brazilian policy makers will delay interest-rate increases boosted stocks that are linked to domestic demand.

Homebuilder Brookfield Incorporacoes SA gained even after reporting an unexpected loss in the fourth quarter as Brazil’s swap rates declined. Cosmetics maker Natura Cosmeticos SA was the best performer on the MSCI Brazil/Consumer Staples index.

The Bovespa index gained 0.3 percent to 56,225.22 at 10:26 a.m. in Sao Paulo, paring this quarter’s rout to 7.7 percent. The real gained 0.1 percent to 2.009 per dollar. Swap rates on contracts due January 2015 fell 0.01 percentage point to 8.44 percent after the central bank said in a report today that monetary policy should be conducted in a “cautious” way even after it increased inflation forecasts for this year.

“The report from the central bank shows that the government is not willing to sacrifice growth to tame inflation,” Luciano Rostagno, the chief strategist at Banco WestLB do Brasil SA, said in a phone interview from Sao Paulo.

Brookfield rose 1.2 percent to 2.53 reais. Natura added 0.5 percent to 48.06 reais.

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