Ibovespa Rises as Commodities Gain Boosts Brazil Export Outlook

The Ibovespa advanced for the first time in three sessions as commodities from metals to oil rose, boosting the outlook for Brazilian raw-material producers.

Usinas Siderurgicas de Minas Gerais SA climbed after JPMorgan Chase & Co. raised its recommendation on the steelmaker to the equivalent of hold. Vale SA, the world’s largest iron-ore producer, followed metals higher. Cia. Paranaense de Energia, the electricity distributor known as Copel, rallied as a regulator approved a rate increase.

The Ibovespa added 0.9 percent to 45,483.43 at the close of trading in Sao Paulo. Forty-nine stocks rose while 20 fell. The real depreciated 0.3 percent to 2.2677 per dollar at 5:21 p.m. local time even after the central bank intervened. The Standard & Poor’s GSCI index of 24 raw materials advanced 1.1 percent. Commodities producers account for about 37 percent of the Ibovespa’s weighting.

“Commodities producers have fallen quite a lot lately, and some of them are trading at attractive levels now,” Joao Pedro Brugger, who helps oversee 330 million reais at Leme Investimentos in Florianopolis, Brazil, said in a telephone interview.

Industrial metals advanced after data showed imports of copper into China reached a nine-month high. Crude climbed on speculation that shrinking U.S. stockpiles indicate increased demand in the world’s biggest oil consumer.

Usiminas, Vale

Usiminas, as Usinas Siderurgicas is known, added 2.6 percent to 6.75 reais. Vale climbed 1.4 percent to 26.44 reais.

Copel, which serves the state of Parana, gained 7.9 percent to 29.80 reais. Brazil’s power regulator, Aneel, granted permission for the company to raise rates by 9.55 percent after Parana Governor Beto Richa last month asked the utility to scrap an increase of as much as 14.61 percent amid nationwide protests over inflation and corruption.

JPMorgan today cut its recommendation on Brazilian equities to the equivalent of sell, citing concern that a slowdown in China will hurt commodities exports and that the economic recovery may be hindered by higher government spending. Protesters took to the streets last month to demand better public services in the country’s biggest demonstrations in two decades.

“The response to the current unrest is policies that we believe add to fiscal deterioration,” JPMorgan analysts including Adrian Mowat wrote in a research note. “Add to that the impact of higher global bond yields on a country with a current account deficit and China economic risk.”

Brazil’s benchmark equity gauge has slumped 24 percent this year, the worst performance among the top 20 biggest equity markets tracked by Bloomberg. The Ibovespa trades at 11.3 times analysts’ earnings estimates for the next four quarters, compared with 9.8 for the MSCI Emerging Markets Index of 21 developing nations’ equities.

Trading volume for stocks in Sao Paulo was 5.57 billion reais today, according to data compiled by Bloomberg. That compares with a daily average of 7.88 billion reais this year through July 4, according to data compiled by the exchange. Brazil’s markets were closed yesterday for a holiday.