Brazil Stocks Lead World Gains as Real Climbs Amid Metals Rally

  • Vale posts biggest advance since 2008 as iron ore rises
  • Currency extends this year's increase, most in region

Brazil’s stocks led global gains and the real advanced as the dollar’s slide lifted metals prices, bolstering the outlook for the nation’s exports.

The Ibovespa posted the biggest back-to-back advance since August as iron-ore producer Vale SA surged the most since 2008. Steelmakers Cia. Siderurgica Nacional SA and Gerdau SA jumped at least 9.7 percent. The real extended this year’s increase to 1.9 percent, the most among Latin American currencies.

Brazilian shares and the real joined gains in developing-nation assets as the U.S. dollar’s decline helped boost the price of industrial metals. The advance overshadowed concern that the deepest recession in a century will sap corporate earnings in Latin America’s largest economy.

"Brazilian equities are benefiting a lot from the good mood in international markets," said Vitor Suzaki, an analyst at brokerage Lerosa Investimentos in Sao Paulo. "Investors are taking more risk."

The Ibovespa climbed 3.1 percent to 40,821.73 at the close of trading in Sao Paulo as all but five of its 61 companies advanced. The real added 0.2 percent to 3.8902 per dollar, the highest level this year.

Still, concern over heightened political turmoil remained in the background. Late Wednesday, Brazil’s lower house of Congress approved a watered-down bill to increase capital gains taxes, cutting the extra income that President Dilma Rousseff was hoping for by half. The vote suggested her administration may face stiff opposition to measures designed to cut the nation’s deficit, such as a tax on banking transactions known as CPMF.

“The first vote this year showed that Congress is not working with the government and that it will be very hard to have the fiscal measures approved,” said Joao Paulo de Gracia Correa, a foreign-exchange director at SLW Corretora de Valores in Curitiba, Brazil.

The Ibovespa has lost 17 percent in the past year and the real has led world losses as Rousseff struggles to shore up the nation’s finances while trying to fend off attempts to remove her from office. Brazil had its credit rating cut to junk by Standard & Poor’s and Fitch Ratings last year because of low growth, budget deficits and moves to impeach the president.

Swap rates on the contract maturing in January 2017, a gauge of expectations on Brazil’s interest-rate moves, advanced 0.05 percentage point to 14.53 percent.

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