Brazil's Bovespa Rises to Record Led by Petrobras: Latin Stocks

Jan. 19 (Bloomberg) -- Brazil's benchmark stock index rose to a record, its first gain in three days, after the central bank made the biggest cut in two years in the benchmark interest rate.
The Bovespa index of the 57 most traded shares of the Sao Paulo stock exchange rose 1,053, or 2.9 percent, to 36,858.19. Petroleo Brasileiro SA, the state-controlled oil company which is known as Petrobras, led the gain. Elsewhere in the region, the Mexican Bolsa rose 202.04, or 1.1 percent, to 18,468 as of 3:15 p.m. New York time.
Brazil's central bank decision yesterday to cut benchmark lending rate by 0.75 percentage point, to a 13-month low of 17.25 percent, spurred the Bovespa, said Alexandre Povoa, who helps manage 500 million reais of stocks and bonds for Modal Asset Management in Rio de Janeiro. The reduction, in line with the median forecast in a Bloomberg survey of 33 economists, was bigger than the half-point cuts at the past three policy meetings.
``What matters for the stock market is the continuing process of rate cuts,'' Povoa said in a phone interview.
Policy makers began reversing rate increases in September, bringing the benchmark rate down from a two-year high of 19.75 percent, as inflation eased. Even after five reductions, Brazil's 17.25 percent benchmark rate remains among the highest in the world.
Most Latin American markets rose today, following Japan's Topix index, which had the biggest rally in 20 months, rebounding from a three-day slide that cut almost $400 billion in value from the market.
The Morgan Stanley Capital International index of Latin American stocks rose 2.6 percent to 2350.84, the biggest increase since Jan. 3.
``It reflects confidence from abroad,'' Pedro Bastos, who helps manage about 33 billion reais ($14.2 billion) in assets at Unibanco Asset Management, said in a phone interview from his office in Sao Paulo. ``There was concern that it could be the start of a declining trend, but that wasn't the case.''
In Argentina, the Merval index rose for a third day led by Tenaris SA, the world's biggest maker of seamless steel pipes for the oil industry, after Morgan Stanley raised its recommendation on the stock. The index rose 55.66, or 3.4 percent, to 1701.18, the highest level since Oct. 3.
Christian Audi, an analyst at Morgan Stanley, raised Tenaris shares in the U.S. to ``overweight/attractive'' from ``equal- weight/in-line''
``Merval is very concentrated in a few companies, and the upgrade by Morgan Stanley led investors to buy Tenaris, dragging the entire index,'' said Hernan Fardi, an equity analyst at Maxinver, in Buenos Aires.
The main indexes in Chile, Venezuela and Peru also rose, while Colombia's IGBC index fell.
The following stocks made significant gains or losses in Latin American markets today. Symbols are in parentheses after the company name.
Brazil
Petrobras (PETR4 BS) rose 1.32 reais, or 3.1 percent, to 43.70 reais, after falling 2.5 percent in the past two sessions.
``Petrobras is an excellent investment,'' Povoa said. ``The oil and iron-ore businesses are still the best options in the Brazilian stock market.''
Cia. Vale do Rio Doce (VALE5 BS), the world's largest iron-ore producer, rose 2.73 reais, or 3 percent, to 94.93 reais. China's iron ore imports may rise 16 percent this year to 320 million metric tons as steelmakers boost production capacity, the China Metallurgical and Mining Association said. Soaring Chinese demand helped contract iron ore prices jump a record 71.5 percent last year, boosting profit at Vale and others iron-ore producers.
Caemi Mineracao e Metalurgia (CMET4 BS), a unit of Vale, rose 12 centavos, or 3.2 percent, to 3.93 reais.
Empresa Brasileira de Aeronautica (EMBR4 BS), or Embraer, the world's fourth largest aircraft maker, rose 57 centavos, or 2.5 percent, to 23.82 reais. Harbin Embraer Aircraft Industry Co., a joint venture between Embraer and state-owned China Aviation Industry Corp. II, said it will sell five ERJ145 planes to China Eastern Airlines Corp.
The sale is ``positive'' for Embraer, after it reported lower-than-expected delivery figures in fourth quarter and 2005, and didn't change its forecast of 145 deliveries in 2006, Daniela Bretthauer, an analyst with Santander Investment Securities Inc., wrote in a report.
Gerdau SA (GGBR4 BS), Latin America's largest steelmaker, rose 1.70 reais, or 4.3 percent, to 41.50 reais. Local shipments of long rolled steel products rose 9.5 percent in December from a year earlier, the national steelmaker association said yesterday. Local demand will keep improving as interest rates fall, mortgage lending increases and the elections lead to government spending, Jander Medeiros, an analyst with Banco Pactual SA, wrote in a report.
Medeiros' only ``top pick'' in the sector is Gerdau.
Argentina
Tenaris SA (TS AR) rose 4.20 pesos, or 10 percent, to 45.20 pesos, a record high.
Mexico
America Movil (AMXL MM), Latin America's biggest mobile telephone company, rose 28 centavos, or 1.7 percent, to 17.17 pesos. America Movil, which has climbed almost 80 percent in the last 12 months, had fallen 4.9 percent on Jan. 17.
Carso Global Telecom SA de CV (TELECOA1 MM), the company that controls Telefonos de Mexico SA, rose 55 centavos, or 2.2 percent, to 24.95 pesos. The shares had fallen 8.4 percent in the previous two sessions. Telmex (TELMEXL MM), Latin America's largest fixed- line phone company, rose 8 centavos, or 0.6 percent, to 12.78 pesos.
Chile
Enersis SA (ENERSIS CC), South America's second-largest energy company, rose 1.93 pesos, or 1.6 percent, to 120. The company will release its fourth quarter earnings on Jan. 27.
To contact the reporter on this story:
Telma Marotto at at tmarotto1@bloomberg.net;

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