Brazil’s Bovespa Rises Most in Week, Led by Banks; Mexico Gains
Brazil’s main stock index rose the most in a week after Petroleo Brasileiro SA gained on speculation of an oil discovery and banks rallied on a government report that lending may reach a record this year.
Petrobras, as Brazil’s state controlled oil company is known, gained the most in almost two months after traders said it may have found oil off the coast of Maranhao state. Uniao de Bancos Brasileiros SA paced a rally in banks after the central bank said lending may reach 40 percent of gross domestic product.
The Bovespa index of most-traded shares on the Sao Paulo exchange advanced for a third day, gaining 1,421.53, or 2.4 percent, to 61,234.06. Mexico’s Bolsa index gained 1.2 percent and Argentina’s Merval rose 2.7 percent.
Petrobras led gains for commodity producers, rising 5.3 percent to 73.70 reais. Traders are speculating Petrobras discovered a field in Maranhao that is bigger than its Tupi field offshore Rio de Janeiro. A spokesman at Petrobras declined to comment. Votorantim Celulose e Papel SA and other pulp and paper producers rallied after the company doubled its forecast for price increases in 2008.
“Speculation is bouncing around the market that there is another find in Maranhao,” said Eduardo Roche, who helps manage the equivalent of about $280 million at Modal Asset Management in Rio de Janeiro. Votorantim’s forecast “is very good news and will help sustain the pulp, paper industry in 2008.”
Votorantim rose 5.2 percent to 51.31 reais. Aracruz Celulose SA, Latin America’s biggest pulp producer, climbed the most in more than a month, rising 3.6 percent to 12.26 reais.
Banks Surge
Banks rallied as faster economic growth may fuel demand for credit in Latin America’s biggest country. Unibanco, Brazil’s fourth-largest non-government bank, jumped 5.4 percent to 21.66 reais.
Borrowing as a share of GDP rose from 34.9 percent in February and total lending is expected to expand as much as 25 percent this year, the same pace of growth as in the past four years, said Altamir Lopes, head of the central bank’s economic research department.
Financial companies and steelmakers also gained after Finance Minister Guido Mantega denied reports the government will increase minimum down payments as part of measures to curb consumer credit.
Banco Itau Holding Financeira SA, Brazil’s largest non-state bank, climbed 4.9 percent to 41 reais. Twenty-six percent of the bank’s loan portfolio is comprised of auto loans and the bank would have been hurt the most by the government measures, Deutsche Bank said in a report yesterday. Banco Bradesco SA surged 3.9 percent to 50.80 reais. Bradesco has 16 percent of its loan portfolio in auto loans, Deutsche said.
Steelmakers Rally
Usinas Siderurgicas de Minas Gerais SA, the largest producer of steel for the auto industry, gained 3.9 percent to 102.35 reais. Cia. Siderurgica Nacional SA, which also sells flat-steel to the auto industry, rose 1.3 percent to 62.26.
Mantega, speaking to reporters in Brasilia yesterday, denied a newspaper report that the government plans measures to limit credit. He said Brazil will keep a close eye on a surge in commercial bank lending that may stoke inflation in coming years. Globo daily newspaper reported March 22 that Brazil is studying ways to limit consumer credit in an effort to check inflation without having to raise the benchmark interest rate.
“Mantega’s denial is causing the stocks that were hurt from the concern on credit limits to recover,” said Roche.
In Mexico, the Bolsa index rose to the highest this month as investors speculated that the country’s investment in highways, ports and hydroelectric projects will lessen the impact of the U.S. economic slowdown.
Citigroup Inc. analysts Geoffrey Dennis and Jason Press said today Mexican construction and materials companies including Cemex SAB will benefit from recent infrastructure development projects announced by government.
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