Ibovespa Advances as Petrobras Rally Outweighs Economic Concern

The Ibovespa rose for a second day, erasing earlier losses, as a rally in Petroleo Brasileiro SA outweighed a survey showing economists cut growth estimates for Brazil.

State-run oil producer Petrobras extended its two-day advance to 9.1 percent and contributed the most to the benchmark stock gauge’s gain. Meatpacker JBS SA was the worst performer on the index after Valor Economico newspaper reported the company made a deposit into two accounts tied to a probe into Brazil’s biggest-ever corruption scandal.

The Ibovespa added 0.9 percent to 50,120.86 at the close of trading in Sao Paulo, after falling as much as 1.1 percent earlier today. The gauge’s 90-day volatility rose to 33.93 percent last week, the highest level in three years, according to data compiled by Bloomberg. Petrobras rebounded after a probe into alleged bribery of company executives sent the stock to a decade low.

“Petrobras has shifted direction, and the Ibovespa followed suit,” Lauro Vilares, an analyst at Guide Investimentos, said by telephone from Sao Paulo. “Volatility is very high while trading is low these days.”

Trading volume of equities in Sao Paulo was 4.7 billion reais ($1.8 billion) today, according to data compiled by Bloomberg. That compares with a daily average of 7.4 billion reais this year, according to the exchange.

Stocks had fallen earlier today after a weekly central bank survey showing economists reduced their median estimate for growth next year to 0.55 percent from 0.69 percent.

Corruption Scandal

Petrobras climbed 5 percent to 10.32 reais. The shares had fallen as much as 1.2 percent earlier today as Brazilian President Dilma Rousseff said that there’s no need to replace Chief Executive Officer Maria das Gracas Foster as she doesn’t lack credibility. The company said Dec. 12 it would delay its third-quarter financial results for a second time while it investigates new witness statements in what has become Brazil’s largest-ever money laundering and corruption scandal.

A former executive said on a Brazilian TV show yesterday that she had alerted Foster in person on illegalities at the company.

JBS retreated 8.7 percent to 11.16 reais, its biggest drop since May 2012. The deposits under investigation were payments for the acquisition of an industrial plant and two distribution units in 2012, JBS said in a statement to regulators. The company has all the documents to prove the transaction took place, it said.

The Ibovespa entered a bear market Dec. 12 after falling 22 percent from this year’s high in September.

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