Brazil's Stocks Rise as Rousseff Says Levy Staying in Government

  • Petrobras advanced as refinery acquisition may be canceled
  • Brewer Ambev falls amid forecasts for deeper GDP contraction

Brazil’s benchmark stock index rose for the first time in three days after President Dilma Rousseff said that Joaquim Levy will stay in the government, fueling optimism that the Finance Minister may gather support for measures to trim the country’s budget deficit.

After media reports last week that Levy was going to be replaced by former central bank head Henrique Meirelles, Rousseff said her finance minister would keep his job and that speculation about his future is negative for Brazil. Levy also said over the weekend that he has Rousseff’s support and would remain in office.

"Whoever is the minister, the problems and challenges are the same," Raphael Figueredo, an analyst at brokerage Clear Corretora, said from Sao Paulo. "But reducing the uncertainty is positive."

State-controlled oil producer Petroleo Brasileiro SA rose the most on the index after a prosecutor said that the acquisition of the refinery of Pasadena, in 2006, may be canceled as the company that sold the business paid bribes. Cetip SA, the country’s biggest fixed-income clearing house, climbed after exchange-operator BM&FBovespa SA offered cash and stock to merge with the company.

The benchmark Ibovespa index added 0.7 percent to 46,846.88 at the close of trading in Sao Paulo as 28 of its 63 stocks climbed. Petrobras added 5.9 percent, while both Cetip and BM&FBovespa advanced.

Gains on the Ibovespa were limited as analysts forecast the country will post a deeper contraction. Gross domestic product will contract 3.1 percent in 2015 and 2 percent in 2016, according to a central bank weekly survey with 100 economists. They were previously expecting an activity drop of 1.9 percent next year.

That would be Brazil’s longest recession since the 1930s. Brazil’s government is struggling to pass measures including expenses cuts and tax increases intended to avoid another credit rating downgrade after Standard & Poor’s cut the country to junk in Sept.

Retailer B2W Cia. Digital was the worst performer on an MSCI index of consumer discretionary stocks. Miner Vale SA fell as commodities declined on concern tension in the Middle East will escalate.

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