Ibovespa Rises for Sixth Day as Petrobras Jumps With Commodities

  • Raw-material producers lead gains on the MSCI Brazil Index
  • Itau BBA says now it's not the time to buy Brazilian equities

Brazilian stocks advanced for a sixth day as a rally in commodities boosted raw-material producers including Petroleo Brasileiro SA.

The Ibovespa rose to a six-week high as geopolitical tensions in the Middle East spurred gains in oil. Energy and raw-material stocks were the best performers among 10 industries on the MSCI Brazil Index, with steelmaker Gerdau SA extending a five-day surge to 22 percent.

“Most of bad news coming from Brazil are more than priced in, and the rebound in commodities is lifting equities,” said Fernando Goes, an analyst at brokerage Clear Corretora.

The Ibovespa added 0.3 percent to 48,284.19 at the close of trading in Sao Paulo. The gauge earlier fell 1.5 percent as investors shunned riskier assets amid increased tensions in Syria after and data about the U.S. economy fueled speculation that the Federal Reserve may increase interest rates in December. The index traded at 11.3 times estimated earnings, compared with a valuation of 13.7 for the MSCI Emerging Markets Latin America Index.

Brazil’s benchmark equity index has declined 17 percent from this year’s peak in May as the government struggled to find support for a plan to reduce spending and raise taxes. Opponents, and even members of President Dilma Rousseff’s own party, have been saying that the measures will deepen the country’s contraction.

The Ibovespa will continue to underperform in the short term as the economy continues to weaken, sapping corporate earnings, said Carlos Constantini, global head of equities and fixed income distribution at Banco Itau BBA SA.

“It’s not the right time to invest in Brazilian equities if you’re looking at the short term,” Constantini said in an interview in London.

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