Ibovespa Gains With Real as Petrobras Jumps on OPEC Deal Report

  • State-owned oil producer contributes most to Ibovespa advance
  • Miner Vale climbs as JPMorgan reiterates buy recommendation

The Slow Unraveling of Brazil, Explained in Two Minutes

Brazil’s real gained and the Ibovespa rose to a three-week high as state-controlled oil producer Petroleo Brasileiro SA followed gains in crude.

Petrobras, which accounts for 10 percent of the Ibovespa’s weighting, contributed the most to the equity index’s advance as oil climbed after OPEC agreed to a preliminary deal that will limit production. An extraordinary dividend by petrochemicals maker Braskem SA, in which Petrobras has a 22 percent stake, also boosted both companies. The real reversed course after reports of the OPEC deal and climbed 0.5 percent to 3.2167 per dollar.

As Brazil’s new government pushes for measures aimed at boosting growth and shoring up the budget, a brighter outlook for the country’s raw materials giants is encouraging investors to bet on the equity market. An MSCI index of energy producers was the best performer among 11 industry groups.

"The market is monitoring OPEC’s meeting and crude inventories today,” Raphael Figueredo, an analyst at the brokerage Clear Corretora, said from Sao Paulo. Those are “the biggest drivers” for the day, Figueredo added.

The Ibovespa climbed 1.7 percent to 59,355.77 at the close of trading in Sao Paulo, the most in three weeks, as all but five of its 58 stocks climbed. Petrobras gained 5.6 percent, while Braskem rallied 10 percent, the best performance on the index. Miner Vale SA rose to a one-month high after JPMorgan Chase & Co. reiterated a buy recommendation on the stock citing stable iron prices and the outlook for profits.

Oil rallied as much as 6.2 percent in New York after OPEC agreed to drop production to a range of 32.5 to 33 million barrels per day at an informal meeting in Algiers. Many of the details remain to be worked out and the group won’t decide on targets for each country until its next meeting at the end of November.

Crude is Brazil’s third-biggest export, and gains in oil prices can bolster the currency by signaling greater revenue from abroad. The real had declined earlier amid speculation banks were seeking to weaken it before the central bank determines a key rate used in settling some financial contracts.

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