Ibovespa Gains as Homebuilders Rally Offsets Usiminas Decline

The Ibovespa rose for a second day as homebuilder MRV Engenharia & Participacoes SA climbed to a two-week high after reporting a quarterly sales increase and as data showed slower-than-forecast inflation in Brazil.

Cyrela Brazil Realty SA Empreendimentos e Participacoes also gained as booked sales recovered. Usinas Siderurgicas de Minas Gerais SA paced losses among steelmakers, while oil producer OGX Petroleo & Gas Participacoes SA led a drop in companies controlled by billionaire Eike Batista. Iron ore producer Vale SA increased to a three-week high, contributing most to the gauge’s advance.

The Ibovespa gained 0.3 percent to 46,869.29 at the close of trading in Sao Paulo after earlier falling as much as 0.7 percent. Thirty-nine stocks declined on the gauge and 29 rose, while 100-day volatility on the measure reached 22.83, the highest since November. The real weakened 1.5 percent to 2.2541 per dollar at 5:28 p.m. local time.

“Cyrela and MRV are two of the most attractive companies in the homebuilding sector,” Felipe Miranda, an analyst at Empiricus Research, a Sao Paulo-based equity consulting firm, said in a telephone interview. “They reported solid preliminary figures, which are pushing stocks higher.”

MRV jumped 3.7 percent to 6.74 reais. Booked sales increased 47 percent in the April-to-June period from a year earlier, the company said in a regulatory filing yesterday after the market closed.

Cyrela advanced 2.8 percent to 16.50 reais as quarterly contracted sales increased 66 percent.

Limited Gains

Homebuilders also climbed as a report showing slowed inflation reduced prospects for steeper increases in interest rates. The IGP-10 price index, which monitors wholesale, construction and consumer prices, rose 0.43 percent in the month ended July 10 following a prior increase of 0.63 percent, the Getulio Vargas Foundation reported today. That compares with the median estimate of 0.56 percent among economists surveyed by Bloomberg.

Gains on the benchmark gauge were limited as Usiminas, as Usinas Siderurgicas is also known, tumbled 3.6 percent to 7.28 reais. The shares had jumped 15 percent yesterday. Cia Siderurgica Nacional SA, the steelmaker also known as CSN, declined 3.1 percent to 5.88 reais after rallying 8.2 percent yesterday.

“Despite the massive equity selloff in the last few months, we remain cautious on the steel sector,” Banco BTG Pactual SA analysts including Edmo Chagas wrote in a report published today. “Global steel prices are likely to remain under pressure on a combination of excess capacity and declining raw material prices.”

Vale, OGX

Vale, the stock with the heaviest weight on the Ibovespa, gained 1.9 percent to 27.87 reais, the highest since June 21. The Bloomberg Base Metals 3-Month Price Commodity Index climbed

0.9 percent.

OGX slumped 3.9 percent to 49 centavos. Batista’s miner, MMX Mineracao & Metalicos SA, dropped 2.2 percent to 1.34 reais, extending its decline this year to 70 percent.

The Ibovespa had slumped 23 percent this year through yesterday, wiping out $248 billion from the value of Brazilian equities, according to data compiled by Bloomberg. Brazil’s main equity gauge trades at 11.9 times analysts’ earnings estimates for the next four quarters, compared with 10.3 for the MSCI Emerging Markets Index of 21 developing nations’ equities.

Trading volume for stocks in Sao Paulo was 5.1 billion reais today, according to data compiled by Bloomberg. That compares with a daily average of 7.81 billion reais this year through July 12, according to data compiled by the exchange.