Ibovespa Posts Weekly Advance as Fibria Rallies With Commodities

The Ibovespa posted a second consecutive weekly gain as pulp producer Fibria Celulose SA led commodity producers higher amid speculation that a pickup in global growth will boost Brazil’s exports.

Gerdau SA, Latin America’s biggest steelmaker, jumped the most since June 2012 after it was raised to buy at Banco Santander SA. The MSCI Brazil/Materials Index was the best performer among 10 industry groups. Shopping mall owner BR Malls Participacoes SA sank as consumer stocks dropped after JPMorgan Chase & Co. reduced its estimates Brazil’s economic growth.

Brazil’s benchmark stock gauge gained 1.2 percent to 51,538.78 at the close of trading in Sao Paulo as 44 of its 71 member stocks rose. The Ibovespa gained 3.3 percent this week. The real fell 2.1 percent to 2.3907 per dollar at 5:18 p.m. local time. Commodities advanced as a report showed U.S. housing starts increased 5.9 percent in July.

“The global economy seems to be strengthening, especially in the U.S., which has been helping to boost Brazilian equities,” Joao Pedro Brugger, who helps oversee 330 million reais at Leme Investimentos, said in a phone interview from Florianopolis, Brazil. “Even after recent gains, I see room for the Ibovespa to keep going higher.”

Data this month showed gross domestic product in the 17-nation euro area rose 0.3 percent in the April-June period, following a contraction in the previous three months, while Chinese industrial production and exports in beat estimates.

The MSCI World Index advanced 0.1 percent. The Bloomberg Base Metals 3-Month Price Commodity Index climbed 1.1 percent. The Standard & Poor’s GSCI gauge of 24 commodities rose 0.2 percent.

Gerdau, Fibria

Gerdau gained 6.6 percent to 16.26 reais. Santander raised its recommendation on the stock to buy, saying the company’s earnings will benefit from rising steel prices and a weakening real, according to a research note e-mailed to clients today. Competitor Usinas Siderurgicas de Minas Gerais SA climbed 4.5 percent to 10.30 reais.

Fibria rallied 8.2 percent to 27 reais, the biggest one-day gain on record. Smaller competitor Suzano Papel & Celulose SA rose 6.1 percent to 8.81 reais.

BR Malls slumped 4.2 percent to 19.09 reais, the most on the Ibovespa. JPMorgan cut its forecast for Brazil’s economic growth in 2014 to 2.4 percent from 2.7 percent, according to a research report.

“Although activity was accelerating until June, we should see July activity numbers plunging as there was a widespread decline in confidence,” JPMorgan analysts led by Fabio Akira wrote in a report. “However, even acknowledging that part of this decline in sentiment could be temporary, we think that it could have longer-lasting economic implications.”

Earnings Boost

Second-quarter earnings from companies including Vale SA, the world’s largest iron-ore producer, have also helped boost Brazilian stocks in the past two weeks, Fernando Goes, an analyst at Sao Paulo-based brokerage Clear Corretora, said in a phone interview. Seven of nine raw material companies on the Ibovespa benchmark reported earnings that exceeded forecasts for the three months ended in June, according to data compiled by Bloomberg. It was the first time that a majority of them beat estimates since the second quarter of last year.

Vale rose 2 percent to 32.17 reais today, pushing this week’s gain to 4.1 percent.

Itau Unibanco Holding SA sank 2.1 percent to 29.20 reais after saying in a regulatory filing Brazil is claiming 18.7 billion reais in unpaid taxes and fines. Itau said it’s challenging the charges.

The Ibovespa has advanced 14 percent from this year’s low on July 3 as higher commodities prices boosted raw-material exporters and OGX led a rally by companies owned by Eike Batista. Brazil’s benchmark equity gauge trades at 13.4 times analysts’ earnings estimates for the next four quarters, compared with 10.5 for the MSCI Emerging Markets Index of 21 developing nations’ equities.

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