Ibovespa Rises as Brazil Interest-Rate Outlook Boosts Retailers

The Ibovespa advanced, after falling for three straight weeks, as traders pared bets on higher borrowing costs in Brazil, boosting the outlook for companies that sell in the local market.

B2W Cia. Digital led gains on the benchmark gauge, with real-estate properties manager BR Properties SA also trading higher. Petrochemicals producer Braskem SA was the worst performer on the index after O Estado de S.Paulo reported Petroleo Brasileiro SA is seeking to raise prices of naphtha sold to the company by 5 percent.

The Ibovespa rose 0.4 percent to 51,165.38 at the close of trading in Sao Paulo, with 45 stocks higher and 24 lower. The real strengthened 0.6 percent to 2.3180 per U.S. dollar at 5:39 p.m. Brazilian swap rates, a gauge of expectations for interest rates, dropped on most contracts after economists surveyed by the central bank lowered their 2013 inflation forecasts.

“The outlook for monetary policy isn’t the main risk hovering over equities anymore,” Joao Pedro Brugger, a portfolio manager at Leme Investimentos, said in a phone interview from Florianopolis, Brazil. “The latest inflation data have been a positive.”

Consumer prices in Brazil will increase 5.70 percent this year, down from a previous estimate of 5.81 percent, according to the median forecast in the weekly central bank survey published today. Policy makers have boosted borrowing costs by 2.75 percentage points since April as inflation remained above the government’s 4.5 percent target.

B2W added 5.6 percent to 15.10 reais, the highest since Nov. 18. BR Properties rose 3.6 percent to 18.59 reais.

Braskem Decline

Braskem dropped 4.5 percent to 20.10 reais. Petrobras, as Petroleo Brasileiro is known, is seeking to raise naphtha prices as imports of the raw material become more expensive, Estado reported Dec. 7, without saying where it got the information. Braskem said by e-mail to Bloomberg News that it “is negotiating with Petrobras to renew the naphtha contract and trusts that developments will be positive.”

An increase in naphtha prices may reduce Braskem’s earnings before interest, taxes, depreciation and amortization by 5 percent in 2014, Banco Itau BBA SA analysts Paula Kovarsky and Diego Mendes said.

“We expect this news to generate some negative momentum for Braskem,” the analysts wrote in a note to clients.

CVC Brasil Operadora e Agencia de Viagens SA, a travel agency controlled by Carlyle Group LP, sank 3.1 percent to 15.50 reais in its first day of trading in Sao Paulo. The private equity firm and other investors sold shares last week in an initial public offering for 16 reais, below the bottom of the target range.

Bull Market

Brazil’s benchmark equity index 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 26 percent in dollar terms this year, compared with a decline of 4 percent for the MSCI Emerging Markets Index of 21 developing nations’ equities.

Trading volume of stocks in Sao Paulo was 4.69 billion reais today, according to data compiled by Bloomberg. That compares with a daily average of 7.50 billion reais this year through Dec. 8, according to data available from the exchange.

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