Ibovespa Snaps Two-Day Drop as Itau Leads Rally in Bank Stocks

The Ibovespa rose for the first time in three days as Itau Unibanco Holding SA led gains among banks after Brazil’s highest court postponed until February a ruling on depositors’ lawsuits that could cost lenders $65 billion.

Banco do Brasil SA and Banco Bradesco SA also gained as the MSCI Brazil/Financials Index jumped the most in a week. Commodity exporters including Vale SA advanced after measures of U.S. and German consumer confidence exceeded analysts’ estimates, easing concern that global growth is faltering. Toll-road operator CCR fell after losing a bid to operate a highway that is one of Brazil’s main transport routes for soy.

The Ibovespa rose 0.8 percent to 51,861.21 at the close in Sao Paulo. The real sank 1.4 percent to 2.3275 per U.S. dollar at 5:20 p.m. local time. Cabinet chief Gleisi Hoffmann said in an interview that she wants the Supreme Court to be “sensible” as it began deliberations today on depositor lawsuits seeking reimbursement for losses stemming from government policies adopted to fight hyperinflation in the 1980s and 1990s.

“Banks are getting a lot of support from the government in this legal dispute,” Fernando Goes, an analyst at Sao Paulo-based brokerage Clear Corretora, said in a phone interview. “A few days ago, investors were anticipating a bigger chance of the court ruling against the banks, but now I’d say that stocks are pricing in a low probability of this happening.”

The high court announced its timetable for a decision after a request by Judge Marco Aurelio de Mello to delay ruling because of the “complexity” of the lawsuits. The central bank estimates that lenders would have to pay 149 billion reais if the court rules in favor of the depositors.

Affected Banks

Federally controlled Banco do Brasil and Caixa Economica Federal “are likely the most impacted banks” since they are the country’s largest holders of savings accounts, analysts at JPMorgan Chase & Co. including Natalia Corfield wrote in a note to clients Nov. 25.

“This wouldn’t be a loss for the banks, it would be a loss for the country,” Hoffmann said in the interview at her office yesterday. “I want the Supreme Court to be sensible and rule in favor of the country.”

Itau added 2.7 percent to 32.85 reais. Banco do Brasil climbed 2.6 percent to 25.40 reais. Bradesco rose 2.3 percent to 30.60 reais.

Forty-three of the Ibovespa’s member stocks advanced today while 27 declined.

Vale, CCR

Vale gained 1.9 percent to 31.45 reais. In the U.S., the Thomson Reuters/University of Michigan final index of consumer sentiment in November rose, while fewer Americans than projected filed applications for unemployment benefits last week. A measure of German consumer confidence from Nuremberg-based GfK AG climbed to the highest since August 2007.

Computer maker Positivo Informatica SA rose 1.4 percent to 2.95 reais after saying its board approved a plan to buy back shares.

CCR fell 1.2 percent to 18.50 reais.

The Ibovespa entered a bull market Sept. 9 after rising 20 percent from this year’s low on July 3 through that day. The gauge is still down 25 percent in dollar terms this year, compared with a decline of 4.6 percent for the MSCI Emerging Markets Index of 21 developing nations’ equities.

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