Ibovespa Rises as Slower Brazil Inflation Offsets Fed Concern

The Ibovespa advanced, reducing a third weekly drop, as slower-than-forecast Brazilian inflation offset concern that the Federal Reserve will reduce U.S. stimulus that has buoyed emerging-market assets.

MMX Mineracao & Metalicos SA rose to a one-week high after saying it is seeking partners to expand a mining project. Rossi Residencial SA (RSID3) led gains among homebuilders as traders reduced bets on higher borrowing costs. EDP-Energias do Brasil SA advanced after selling a stake in some of its power plants in Brazil to China Three Gorges Corp. Car-rental company Localiza Rent a Car SA climbed after Fitch Ratings increased its credit rating.

The Ibovespa rose 0.3 percent to 50,944.27 at the close of trading in Sao Paulo, paring this week's decline to 2.9 percent. Forty-four stocks gained on the gauge today while 28 fell. The real strengthened 1.3 percent to 2.3270 per U.S. dollar at 5:29 p.m. local time. Swap rates on contracts due in January 2015, used to wager on interest rates, fell 0.05 percentage point to 10.63 percent.

"Swap rates are falling a bit because of the inflation report," Luciano Rostagno, the chief strategist at Banco Mizuho do Brasil, said in a phone interview. "Today's figures don't make all the concern about inflation go away, but can help support some short-term gains in the markets."

Consumer prices increased 5.77 percent in November from a year earlier, the national statistics agency said today. The median estimate of economists surveyed by Bloomberg was 5.81 percent.

Rossi, Localiza

Rossi jumped 4.5 percent to 2.10 reais. Localiza added 0.4 percent to 32.89 reais as Fitch increased its issuer default rating to BBB from BBB- with a stable outlook. Energias do Brasil gained 1.4 percent to 11.95 reais.

MMX, the iron-ore producer founded by Eike Batista, gained 8.1 percent to 67 centavos. The company hired Credit Suisse Group AG and XP Investimentos CCTVM SA to find partners for its Serra Azul unit, seeking to boost capacity by about 150 percent to 15 million metric tons per year, Adriana Marques, MMX's investor relations manager, said today.

LLX Logistica SA, the port developer Batista founded, surged 15 percent to 1.06 reais, leading gains on the Ibovespa.

While the Ibovespa earlier fell as a payrolls report in the U.S. rekindled concern that the Fed will soon cut back stimulus, stocks rebounded amid speculation that a stronger economy will support equities, said Joao Pedro Brugger, a portfolio manager at Leme Investimentos.

'Good For Everyone'

"The U.S. economy seems to be doing well, which is good for everyone," Brugger said in a phone interview from Florianopolis, Brazil. "And it's not like the Federal Reserve would be able to keep its stimulus policy unchanged forever. People are starting to get used to this idea."

Brazil's benchmark equity index entered a bull market Sept. 9 after rising 20 percent from this year's low on July 3 through that day. The gauge is still down 27 percent in dollar terms this year, compared with a decline of 4.9 percent for the MSCI Emerging Markets Index of 21 developing nations' equities.

Trading volume of stocks in Sao Paulo today was 6.17 billion reais, data compiled by Bloomberg show. That compares with a daily average of 7.50 billion reais this year through yesterday, according to data available from the exchange.