Brazil Stocks Gain on Bank Earnings, Acucar Sales; Bolsa Rises

By Alexander Ragir and William Freebairn

Nov. 13 (Bloomberg) -- Brazilian stocks staged another late- day rally after the country's biggest state-controlled bank reported profit that exceeded estimates and the largest food retailer reported no slowdown in sales last month.

Banco do Brasil SA paced gains for financial companies, gaining the most in more than a week after it said profit rose 37 percent last quarter. Cia. Brasileira de Distribuicao Grupo Pao de Acucar, Brazil's biggest retailer, surged the most in two weeks on a 17 percent jump in sales last month.

``Banks are a nice play on the domestic story and they've fallen a lot,'' said Eric Conrad, who manages a Latin American hedge fund at ING Investment Management SA in Mexico City. ``There is a lot of deep value.''

The Bovespa advanced 4.7 percent to 35,993.33. The BM&FBovespa Small Cap index rose 2 percent. The BM&FBovespa MidLarge Cap index gained 5.1 percent. Mexico's Bolsa advanced 4.8 percent. Chile's Ipsa added 2.1 percent.

Financial stocks rose the most in the MSCI Brazil Index, gaining 7.7 percent.

Banco do Brasil jumped 6.9 percent to 14.10 reais. Net income rose to 1.87 billion reais ($802 million) in the third quarter, from 1.36 billion reais a year earlier. Net income was higher than the 1.5 billion reais mean estimate of three analysts surveyed by Bloomberg.

The bank, which is in talks to buy Banco Nossa Caixa SA, expanded its credit portfolio by 35 percent in the quarter.

Easing Credit

The government has introduced several measures to lessen the effects of the global credit crisis on the nation's banks including easing reserve requirements. Today, Brazil decided to allow banks to use government bonds instead of cash to meet certain reserve requirements that total 40 billion reais ($17.5 billion) in a bid to increase liquidity.

Banco Bradesco SA gained 9.2 percent to 23.75 reais. Banco Itau Holding Financeira SA, which is buying Uniao de Bancos Brasileiros SA to become Latin America's biggest financial group, jumped 9.2 percent to 26.16 reais.

Pao de Acucar gained 9.9 percent to 34.85 reais. Net sales in all stores rose 29 percent in October to 1.53 billion reais ($659.6 million). Credit Suisse reiterated its ``outperform'' rating for the stock, saying the company showed no signs of deceleration in its October sales.

Lojas Renner SA, Brazil's biggest publicly traded clothing retailer, fell the most in Brazil's main stock index after its chief executive officer signaled to analysts that same-store sales may slow in the fourth quarter.

Renner Drops

Jose Gallo, Renner's CEO, ``guided for similar or possibly lower same-store sales number in the fourth-quarter which is probably what prompted the sell-off in shares today,'' Goldman Sachs Group Inc. analyst Daniela Bretthauer wrote in a note to clients. Gallo made the comments at Goldman's Brazil Conference.

Renner fell 5.7 percent to 14.80 reais.

Mexico's Bolsa index rose the most in two weeks, as Wal-Mart de Mexico SAB gained after its parent company said international sales surged in the fiscal third-quarter.

Walmex, as Mexico's biggest retailer is known, climbed 3.3 percent to 31.67 pesos.

In other Latin America markets, Argentina's Merval rose 0.8 percent, Peru's Lima General index advanced 0.4 percent and Colombia's IGBC slipped 0.6 percent.

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