Brazil Stocks Gain Most in Week on Rate Prospects, Homebuilders

By Alexander Ragir

Oct. 29 (Bloomberg) -- Brazilian stocks rose to the highest in a week on surging commodity prices and speculation the central bank may halt six months of interest-rate increases as the government prepares measures to help the nation's homebuilders.

Gafisa SA and Cyrela Brazil Realty SA Empreendimentos e Participacoes led gains on the Bovespa index after the government said it may offer low-interest loans to builders. Gerdau SA and Centrais Eletricas Brasileiras SA gained 7 percent after Itau Corretora said they will benefit from the real's decline against the dollar. Usinas Siderurgicas de Minas Gerais SA paced gains for steelmakers after it reported profit that topped estimates.

The Bovespa index gained 144.24, or 0.4 percent, to 33,530.89 at 9:33 a.m. New York time. Chile's Ipsa surged 1.2 percent. The MSCI Emerging Markets Index rose 2.7 percent.

Cyrela gained 8.4 percent to 11.22 reais, while Gafisa rose 9.7 percent to 15.35 reais. Finance Minister Guido Mantega said yesterday the government will announce the details of a plan for the homebuilding industry today that includes loans that will cost less than the going market rate.

Policy makers, led by bank President Henrique Meirelles, may keep the benchmark interest rate at 13.75 percent at today's rate meeting, according to 30 of 46 economists in a Bloomberg survey. The others expect the bank to raise the so-called Selic for the fifth time since April. The central bank will announce its decision after 4 p.m. New York time.

Interest-rate futures show a 100 percent chance the U.S. Federal Reserve will also lower its benchmark rate by at least 0.5 percentage point to 1 percent at its policy meeting today. China, the world's largest buyer of industrial metals, today cut rates for the third time in two months to stimulate growth.

Real Winners

The Brazilian currency's 26 percent fall against the U.S. dollar since its August high will help companies which have much of their revenue in dollars such as Eletrobras, Latin America's largest utility, and steelmaker Gerdau, while hurting those whose debt are in foreign currencies, according to Itau Corretora.

Eletrobras gained 2.1 percent to 21.50 reais. Gerdau rose 2 percent to 12.80 reais.

Usiminas, as Brazil's second-biggest steelmaker is known, gained 1.6 percent to 26.90 reais. The company said per-share profit declined to 1.78 reais from 3.45 reais after the company split its shares earlier this year. This topped the 1.77 real average estimate of six analysts in a Bloomberg survey.

The Bloomberg Base Metals 3-Month Price Commodity Index gained for a third day, rising 4.7 percent to 152.3107.

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