Ibovespa Advances as Commodities Gain Boosts Vale

The Ibovespa posted a weekly gain as a bigger-than-forecast increase in U.S. employment sparked a commodities rally, boosting Brazilian exporters.

Iron-ore producer Vale SA contributed the most to today’s advance. Fibria Celulose SA, the world’s largest pulp producer, led gains on the MSCI Brazil/Materials index, which was the best performer among 10 industry groups. State-run oil producer Petroleo Brasileiro SA dropped to a one-week low.

Brazil’s main equity index added 0.3 percent to 55,488.08 at the close of trading in Sao Paulo, extending this week’s gain to 2.3 percent. The real was little changed at 2.0089 per dollar. The Bloomberg Base Metals 3-Month Price Commodity Index surged 5 percent, and the Standard & Poor’s GSCI index of 24 raw materials rose 1.4 percent.

“The jobs report in the U.S. was good, and that was the main event in the market today, as it made investors more optimistic about equities,” Larissa Gatti Nappo, an economist at brokerage Souza Barros, said by telephone from Sao Paulo. “A faster recovery in the U.S. is positive for the economic recovery in Brazil.”

U.S. payrolls expanded by 165,000 last month following a revised 138,000 increase in March that was larger than first estimated, Labor Department figures showed today in Washington. The median forecast of 90 economists surveyed by Bloomberg was for a 140,000 gain.

Vale, Fibria

Vale jumped 1.4 percent to 32.20 reais. Fibria advanced 1.8 percent to 21.39 reais. Commodities producers account for about 39 percent of the Ibovespa’s weighting.

While signs of faster growth in the U.S. may help boost Brazilian equities in the short term, gains may not last if the recovery in Latin America’s largest economy falters, said Otavio Vieira, a partner at the Rio de Janeiro-based hedge fund Fides Asset Management.

Brazil’s industrial production expanded 0.7 percent in March from February, the national statistics agency said today. Economists had forecast output would grow 1.3 percent, according to the median estimate of 33 analysts surveyed by Bloomberg.

“Economic activity in Brazil is still weak, and things need to get better in order for the equity market to sustain a recovery,” Vieira said in a phone interview.

Petrobras slid 1.2 percent to 20 reais.

Totvs Earnings

Totvs SA, a Brazilian maker of business-management software, fell 4.1 percent to 37.70 reais after posting earnings that trailed forecasts. Adjusted net income was 51.9 million reais in the first quarter, less than the average estimate among analysts of 60.7 million reais, according to data compiled by Bloomberg.

The Ibovespa has retreated 12 percent from this year’s peak on Jan. 3 amid concern accelerating inflation may curb Brazil’s economic recovery and the government’s interventionist policies will hurt profits in industries including utilities and energy. The MSCI BRIC Index of shares in Brazil, Russia, India and China has lost 5.6 percent over the same period.

Brazil’s benchmark equity gauge trades at 11.3 times analysts’ earnings estimates for the next four quarters, compared with 10.6 for the MSCI Emerging Markets Index of 21 developing nations’ equities, data compiled by Bloomberg show.

Trading volume for stocks in Sao Paulo was 10.12 billion reais today, according to data compiled by Bloomberg. That compares with a daily average of 7.71 billion reais this year through April 30, according to data compiled by the exchange.

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