Bovespa Futures Gain on U.S., China Stimulus, Rate Cut Bets

By Paulo Winterstein

Dec. 22 (Bloomberg) -- Brazil’s Bovespa stock-index futures gained for the first time in four days after economists increased their bets for rate cuts in Latin America’s biggest economy and governments stepped up efforts to combat a global recession.

Cia. Vale do Rio Doce, the world’s biggest iron-ore producer, rose 2.1 percent in Germany as industrial metals prices climbed. State-controlled oil company Petroleo Brasileiro SA added 3.1 percent in Germany as crude advanced.

“The majority of countries, including emerging markets, are cutting rates” which should help growth next year, said Paulo Mason, director of equities at Alpes Corretora in Sao Paulo. Brazil’s “central bank wanted to be a little more cautious so that it will have room at the beginning of the year to cut rates.”

Bovespa futures added 181, or 0.5 percent, to 40,100 at 7:22 a.m. New York time.

Brazil’s benchmark interest rate, known as Selic, will end 2009 at 12.25 percent, lower than a 13 percent forecast a week earlier, according to a central bank survey of about 100 economists published today.

Inflation is forecast at 5.02 percent next year, slower than the 5.2 percent estimate a week earlier, according to the weekly survey taken Dec. 19. Policy makers led by bank President Henrique Meirelles kept rates unchanged at 13.75 percent during the bank’s most recent meeting on Dec. 9-10.

The increased expectation of a Selic cut comes as China reduced rates and U.S. President-elect Barack Obama boosted his stimulus package plans.

China Cuts Rates

China lowered rates for the fifth time in three months to support the world’s fourth-biggest economy after trade growth collapsed because of recessions in the U.S., Europe and Japan.

Obama is boosting his stimulus package with a goal of creating or saving 3 million jobs over two years after the U.S. entered a recession and the S&P 500 sank 40 percent in 2008. The new target, revised from 2.5 million jobs he previously announced, came at the suggestion of Christina Romer, Obama’s pick to head the Council of Economic Advisers, who said the short, medium and long-term economic forecasts have worsened since Obama outlined the plan on Nov. 22.

To contact the reporter on this story: Paulo Winterstein in Sao Paulo at pwinterstein@bloomberg.net.