Brazil Real Rises as Stock Gains Boost Appeal of Higher Yields

By Adriana Brasileiro

Aug. 20 (Bloomberg) -- Brazil's real strengthened for a second day as gains in local stocks attracted investors to higher-yielding emerging-market assets.

``There's a more positive sentiment in stock markets today, so investors are less apprehensive about buying riskier assets,'' said Sergio Machado, a partner at Vetorial Asset Management in Sao Paulo.

The real rose 0.3 percent to 1.6180 per dollar at 9:48 a.m. New York time, from 1.6234 yesterday. The real has declined 3.2 percent this month, paring its advance this year to 10 percent.

Brazil's Bovespa stock index jumped 1.8 percent, led by financial shares and Cia. Vale do Rio Doce, the world's biggest producer of iron ore.

The yield on Brazil's zero-coupon bonds due in January 2010 rose 2 basis points, or 0.02 percentage point, to 14.70 percent, according to Banco Votorantim. The yield on the overnight interest futures contract for January delivery increased 2 basis points to 13.81 percent.

To contact the reporter on this story: Adriana Brasileiro in Rio de Janeiro at abrasileiro@bloomberg.net