Brazil stocks rise on post-plunge bargain hunting

(Updates to close)

SAO PAULO, May 21 (BestGrowthStock) – Brazilian stocks jumped on
Friday, logging their biggest gains in almost two weeks, as
investors looked for bargain-priced shares after a string of
losing sessions.

The benchmark Bovespa stock index (.BVSP: ) soared 3.55
percent to close at 60,259.33, the index’s best one-day gain
since May 10, despite a weak opening that moved the index into
negative territory.

The index had plunged almost 11 percent over the previous
six sessions, dragged down by risk aversion as investors saw a
euro zone debt crisis slowing global economic growth.

Riskier assets got pummeled in the wake of those fears,
with investors selling stocks worldwide in favor of safe havens
such as the dollar and U.S. sovereign debt.

But the trouncing brought prices low enough to lure
investors back in, said Joao Pedro Ribeiro, an economist at
Tendencias consultancy in Sao Paulo.

“The losses were really big,” he said. “People are trying
to take advantage of bargains.”

Brazil’s currency, the real (BRBY: ), saw choppy trading
throughout the session. Despite falling as much as 2 percent
and touching 1.9 per dollar in intraday trade for the first
time since Sept. 2, the currency ended the day flat at 1.861
per dollar.

“In the short run, it is difficult to disentangle
fluctuations in risk aversion and the euro,” wrote Barclays
Capital analysts in a research note.

“But Latin America has been growing apart from Europe,”
they wrote, adding that longer-term effects of a weakened euro
on Latin American currencies should be more muted.

On the Bovespa, mining giant Vale (VALE5.SA: ), the world’s
largest producer of iron ore, led gains. Those shares surged
7.44 percent to 40.29 reais. That stock had plunged 15.5
percent from its close on May 11 through its Thursday close.

State-controlled energy giant Petrobras (PETR4.SA: ), the
most heavily-weighted stock in the Bovespa index, moved up 0.55
percent to 27.58 reais.

Banks made up some of their recent losses, as well. Itau
Unibanco (ITUB4.SA: ), Brazil’s largest private sector bank by
assets, rose 1.98 percent to 33.50 reais. Banco do Brasil
(BBAS3.SA: ), Latin America’s largest bank by assets, jumped 3.48
percent to 26.18 reais. Bradesco (BBDC4.SA: ) surged 4.68 percent
to 30.20 reais.

Yields on Brazilian interest rate futures contracts
(0#DIJ:: ) broadly slid on views that the European debt crisis
would slow the global economy enough to ease some of the
pressures for interest rate hikes.

The yield on the contract due January 2011 (DIJF1: ) slipped
to 10.96 percent from 10.99 percent. The yield on the contract
due January 2012 (DIJF2: ) dipped to 12.05 percent from 12.1
percent.

Both were among the most highly-traded contracts of the
day.

Investors use the contracts to bet on trends in the
country’s benchmark interest rate, the Selic, which the central
bank increased to 9.5 percent from 8.75 percent last month.

While analysts still see more rate hikes in Brazil’s near
future, some say the pace of that tightening could slow down in
the face of a more sluggish global economy.

Money

Brazil stocks rise on post-plunge bargain hunting