Brazil Stocks Gain Most in Month, Led by CSN, Tam; Mexico Rises

By Alexander Ragir

July 29 (Bloomberg) -- Brazilian stocks rose the most in a month after higher-than-estimated profit at the second-largest U.S. steelmaker boosted local producers and falling oil improved earnings prospects for airlines.

Cia. Siderurgica Nacional SA gained as U.S. Steel Corp. posted almost 50 percent more earnings than analysts forecast after boosting prices. Tam SA, Brazil's biggest airline, advanced on speculation fuel costs may decline after crude oil retreated to an almost three-month low of $122.19 a barrel in New York. Cyrela Realty SA Empreendimentos e Participacoes led homebuilders higher after the central bank said growth in mortgage lending accelerated last month.

The Bovespa index added 2.1 percent to 58,042.87, ending a five-day losing streak that was the longest since August. The MSCI Latin America Index added 2.1 percent at 4:21 p.m. New York time, and Mexico's Bolsa climbed 2.2 percent.

Steelmakers ``are living through a really good moment right now,'' said Jacopo Valentino, who oversees $4 billion as head of Latin American equity at BNP Paribas Asset Management in Sao Paulo. Oil prices ``look like they're giving a bit of relief, so that's good news for Tam and the other carriers.''

Brazil last week became the 23rd out of 25 developing countries in the MSCI Emerging Markets Index to suffer a bear- market retreat of 20 percent or more. Still, the Bovespa's slump sent its price-to-earnings ratio down to 13.23 yesterday, the lowest since January, making Brazilian stocks a better deal.

CSN, Gerdau Gain

CSN, as Brazil's third-biggest steelmaker is known, jumped 4.5 percent to 60 reais. Gerdau SA, Latin America's largest steelmaker, gained 4 percent to 32.10 reais.

Tam advanced 3 percent to 33.13 reais. Gol Linhas Aereas Inteligentes SA, the second-biggest airline, rose 4.7 percent to 16.85 reais. Oil has fallen 17 percent in New York since its July 11 record. Fuel makes up about 40 percent of the airlines' costs, Coinvalores CCVM analyst Marco Severine said.

Cyrela rose 4.2 percent to 22.40 reais. Gafisa SA, Brazil's second-biggest homebuilder, advanced 6 percent to 27.56 reais.

Year-to-date mortgage loan growth increased to 35 percent through the end of June, up from 27 percent as of the end of May, the central bank said today.

Deutsche Bank AG analyst Mario Pierry said in a note to clients that the report showed Brazilian banks should have ``strong'' loan growth, stable asset quality and lower credit spreads for the second quarter.

1.07 Trillion Reais

Banco do Brasil SA, Latin America's largest lender, jumped 5.8 percent to 24.40 reais. Uniao de Bancos Brasileiros SA, Brazil's third-biggest non-state bank, gained 3.9 percent to 20.62 reais.

State and non-state bank lending rose 2.1 percent in June from the prior month to 1.07 trillion reais ($678 billion), the report said. Lending climbed 33 percent from the same month last year.

``As we look through time, banks proved to be able to make money in virtually any scenario,'' William Landers, who oversees $8 billion in Latin American stocks at BlackRock Inc., said during a speech in New York. ``Brazil has excellent buying opportunities.''

Elsewhere in Latin America, Chile's Ipsa index rose 1.7 percent, Argentina's Merval advanced 0.2 percent and Colombia's IGBC index rose less than 0.1 percent. Peru was closed for a holiday.

To contact the reporter on this story: Alexander Ragir in Rio de Janeiro at aragir@bloomberg.net.