Brazilian Stocks Rise to Highest in Week; Bolsa, Ipsa Advance

By Alexander Ragir and William Freebairn

Oct. 29 (Bloomberg) -- Brazilian stocks rose to the highest in a week, led by banks and raw-material producers, on surging commodity prices and speculation the country's central bank may halt six months of interest-rate increases.

Banco Itau Holding Financeira SA led a rally in banks, jumping 13 percent, after global central banks cut rates and the Federal Reserve agreed to give Brazil a $30 billion credit line. Usinas Siderurgicas de Minas Gerais SA rose for a two-day gain of 23 percent after it reported earnings that topped estimates. Gafisa SA jumped to the highest in a week as the government said it may offer low-interest loans to builders.

``The moves by central banks around the word are attempts to try to calm investors,'' said Mirela Rappaport, who helps manage the equivalent of $48 million at Investport in Sao Paulo. ``And equity prices are reflecting panic, not economic conditions, so when people stop panicking, they look at stocks and say `wow, things are really cheap'.''

The Bovespa gained 1,458.56, or 4.4 percent, to 34,845.21. Mexico's Bolsa rose 4.1 percent at 4:17 p.m. New York time. Chile's Ipsa added 2 percent. The MSCI Emerging Markets Index rose 4.1 percent.

Itau surged 13 percent to 21.56 reais. Banks rose 12 percent in the MSCI Brazil Index. Policy makers may keep the benchmark 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 Selic for the fifth time since April. The central bank will announce its decision after 4 p.m. New York time.

Fed Cut

The Federal Reserve cut its benchmark interest rate by half a point to 1 percent, matching a half-century low, in an effort to avert the worst U.S. economic downturn in the postwar era. The Fed also agreed to provide $30 billion each to the central banks of Brazil, Mexico, South Korea and Singapore to boost the liquidity of dollars in emerging markets.

``The crisis in the international banks was very strong and, as a matter of fact, credit lines for trade were the ones that suffered first and the ones that suffered the most,'' Unibanco Vice President Geraldo Travaglia said in an interview in New York before the Fed move.

China, the world's largest buyer of industrial metals, lowered rates for the third time in two months to stimulate growth.

Usiminas, as Brazil's second-biggest steelmaker is known, gained 5.8 percent to 28 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 5.5 percent to 153.5646. Copper jumped 10 percent, the most in two years. Oil climbed 8.7 percent.

Homebuilders Rally

Gafisa paced gains for homebuilders, rising 17 percent to 16.35 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.

``We see the announcement positively for the industry,'' Raymond James & Associates analyst Conrado Vegner wrote.

In Chile, the Ipsa gained for a third day, led by Sociedad Quimica y Minera de Chile SA.

Chile's biggest fertilizer maker added 5.4 percent to 13,100 pesos after saying third-quarter net income jumped to $191 million from $41.5 million a year earlier. Soquimich was reiterated ``buy'' at Banco Santander SA, which attributed the earnings growth to higher potassium prices.

Mexico's Bolsa index rose for a second day, led by Industrias Penoles SAB, the world's biggest silver producer.

Penoles surged 21 percent to 93 pesos as silver prices climbed.

Bancolombia SA, Colombia's biggest lender, led the rally on Colombia's IGBC Index. The shares gained 11 percent after third- quarter profit increased 16 percent, topping analyst estimates.

Argentina's Merval fell 2.6 percent, led by banks, and Peru's Lima General index climbed 7.8 percent.

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