Ibovespa Posts First Weekly Increase This Year as Oi Advances

The Ibovespa posted its first weekly gain of 2014 as real-estate companies climbed after a report showed slower-than-forecast inflation in Brazil.

Oi SA rallied after Folha de S.Paulo reported that a group of 12 banks agreed to raise as much as 8 billion reais to buy a stake in the company that will result from the merger of the phone carrier and parent Portugal Telecom SGPS SA. Homebuilder Gafisa SA led gains on the BM&FBovespa Real Estate index after saying in a filing that it plans to have its two main operating units “working as two separate publicly traded companies.”

The Ibovespa rose 0.7 percent to 48,073.60 at the close of trading in Sao Paulo with 52 of its 72 member stocks higher. The gauge gained 0.9 percent this week. The real strengthened 0.2 percent 2.3778 per U.S. dollar at 5:24 p.m. local time. The IPCA index of consumer prices increased 5.59 percent in the 12 months through January, compared with the 5.65 percent median forecast of economists surveyed by Bloomberg.

“The IPCA numbers were good and bring some relief,” Pedro Galdi, the head strategist at SLW Corretora in Sao Paulo, said in a phone interview. “It’s positive for companies that depend more on domestic consumption.”

Oi gained 4.1 percent to 4.08 reais. The company’s press office declined to comment on Folha’s report when contacted by Bloomberg News.

Gafisa climbed 6.6 percent to 3.21 reais. Shopping mall owner BR Malls Participacoes SA gained 3.5 percent to 16.10 reais after Bank of America Corp. recommended buying the stock. The BM&FBovespa Real Estate Index advanced 1.4 percent.

Natura, Eletrobras

Cosmetics seller Natura Cosmeticos SA added 2.3 percent to 39.90 reais, leading gains by retailers as traders pared bets for higher borrowing costs following the inflation report.

Centrais Eletricas Brasileiras SA, the state-run power utility known as Eletrobras, rose 2.2 percent to 9.47 reais after a group that includes some of its units won the rights to build transmission lines to the Belo Monte Amazon dam.

Gains on the Ibovespa were limited as some commodity producers including mining company Vale SA dropped amid concern that growth will falter in China, Brazil’s top trading partner.

China’s services purchasing managers’ Index slid to 50.7 percent, the lowest since August 2011, a report from HSBC Holdings Plc and Markit Economics showed late yesterday. The country’s official Purchasing Managers’ Index fell to a six-month low of 50.5 in January as output and orders slowed, Feb. 1 data showed.

Vale, Usiminas

“Companies such as Vale are haunted by China,” Otavio Vieira, a partner at hedge fund Fides Asset Management. “It’s hard to predict what will happen in China, but when bad numbers come out, there’s concern that growth over there won’t be enough to support commodities.”

Vale fell 0.5 percent to 30.66 reais. Steelmaker Usinas Siderurgicas de Minas Gerais SA dropped 0.3 percent to 12.31 reais.

Brazil’s benchmark equity gauge has tumbled 15 percent from a bull-market high on Oct. 22 as inflation exceeded policy makers’ target for a third consecutive year and concern mounted that higher government spending will lead to a reduction in the country’s credit rating.

Trading volume of stocks in Sao Paulo today was 6.35 billion reais, data compiled by Bloomberg show. That compares with a daily average of 6.3 billion reais this year, according to data from the exchange.

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