Brazilian Stocks Rise, Led by Banks and Builders; Bolsa Climbs

By William Freebairn and Paulo Winterstein

Sept. 8 (Bloomberg) -- Brazilian stocks rose the most in two weeks, led by homebuilders and banks, as the U.S. government's takeover of the two biggest mortgage finance companies bolstered confidence in the global financial system and commodities gained.

Uniao de Bancos Brasileiros SA, Brazil's third-largest non-state bank by assets, climbed the most in eight weeks as the government takeover of Fannie Mae and Freddie Mac bolstered expectations that banks will recover from $507 billion in credit losses. Cyrela Brazil Realty SA Emprendimentos e Participacoes led a rally in homebuilders. Usinas Siderurgicas de Minas Gerais paced gains for steelmakers after Raymond James & Associates said domestic steel prices will be sustained on rising demand.

``Resolving this crisis of confidence in the U.S. financial system is an important step for the world to continue growing,'' said Regis Abreu, who helps manage about 1.8 billion reais in assets at Mercatto Gestao de Recursos in Rio de Janeiro. ``Without credit you don't have consumer spending, without consumer spending you don't have growth.''

The Bovespa index climbed 1,464.83, or 2.8 percent, to 53,404.43 at 9:42 a.m. New York time. The MidLarge Cap index gained 2.8 percent, while the Small Cap index added 3.7 percent. Mexico's Bolsa rose 1.5 percent and Chile's Ipsa index advanced 1.2 percent. The MSCI Latin America index surged 3.8 percent.

Financial companies led the 10 industry sectors in the MSCI Brazil Index, gaining 6.9 percent.

The Federal Housing Finance Agency will take over Fannie Mae and Freddie Mac to help banks recover from more than $500 billion in subprime mortgage losses, the U.S. government said yesterday. The government will also help home-loan banks and purchase mortgage-backed debt in the open market.

Banks Rally

Uniao de Bancos Brasileiros, also known as Unibanco, rose 4.5 percent to 19.54 reais. Banco Bradesco SA, Brazil's largest non-government bank, gained to the highest in a month, climbing 4.2 percent to 31.52 reais.

Cyrela rose 8.3 percent to 19.66 reais.

Usiminas advanced for the first time in six days, gaining 2.9 percent to 49.40 reais.

The S&P GSCI index of 24 commodity futures rose for the first time since Aug. 27, advancing 1.4 percent.

Petroleo Brasileiro SA, the state controlled oil company, gained 2.9 percent to 32.78 reais as crude rose from a five-month low.

To contact the reporter on this story: Paulo Winterstein in Sao Paulo at pwinterstein@bloomberg.net. William Freebairn in Mexico City at wfreebairn@bloomberg.net