Brazil's Stocks Rally as China Outlook Lifts Commodity Producers

  • Oil company Petrobras jumps most in a year as crude gains
  • Federal police raid in corruption probe fuels optimism

Brazil’s stock index posted the world’s biggest gain as iron-ore miner Vale SA rose to a seven-week high amid speculation demand from China will rebound.

Eight of the Ibovespa’s 10 best performers were tied to the raw-materials industry as commodities and emerging markets rallied worldwide. Petroleo Brasileiro SA, the state-controlled oil producer known as Petrobras, posted the biggest gain and rose the most in a year and it followed crude higher.

Investors also welcomed news that a sweeping corruption scandal that started at Petrobras appears to be drawing ever closer to President Dilma Rousseff. Federal police on Monday started a new phase of the investigation known as Carwash, sparking renewed bets the president will be impeached. While investors in the past have been split about whether a change in government would be positive or negative for markets and the economy, many Brazil watchers now think it could unlock the political gridlock in Brasilia that has hindered efforts to close a budget deficit.

"The day has been very positive in the world, with diminished risk-aversion," Pedro Paulo Silveira, the chief economist at the brokerage Nova Futura, said from Sao Paulo. "Speculation that the federal police investigation could lead to the ouster of Rousseff is also making investors optimistic."

Monday’s raid included the apartment of the media strategist behind the presidential campaigns of President Dilma Rousseff and former President Luiz Inacio Lula da Silva, according to reports from the country’s major newspapers.

The Ibovespa climbed 4.1 percent to 43,234.86 in Sao Paulo, the highest level on a closing basis since Dec. 30 as all but four of the gauge’s 61 stocks advanced. Vale jumped 8.2 percent. Petrobras surged 13 percent, its biggest one-day advance in a year.

BM&FBovespa SA gained 6.4 percent after boosting an offer to buy clearinghouse Cetip SA. The exchange operator said in a Feb. 19 filing that it is willing to pay 41 reais per share to take over Cetip, after initially offering 39 reais. Cetip dropped 0.9 percent.

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