EMERGING MARKETS- Latam stocks up as Petrobras aims for comeback

* Bovespa up 1.67 pct, Mexico’s IPC up 0.31 pct

* Analysts pick iron over steel in Brazil

* Mexico’s IPC, Chile’s IPSA close at new historical highs
(Adds commentary, updates prices to close)

By Guillermo Parra Bernal and Caroline Stauffer

SAO PAULO/MEXICO CITY, Oct 26 (BestGrowthStock) – Latin American
stocks rose on Tuesday, lifted by Petrobras as investors
decided the oil giant’s stock had been punished enough in the
wake of last month’s record breaking share offering.

The most commonly traded shares of Petrobras (PETR4.SA: )
gained 5.2 percent, their highest one-day jump since a $70
billion share sale on Sept. 23 to fund new investments and
offshore exploration.

The MSCI Latin American stocks index (.MILA00000PUS: ), of
which Petrobras shares makes up nearly 15 percent, gained 0.96
percent. Brazil’s Bovespa index (.BVSP: ) added 1.67 percent.

“The stock is extremely undervalued. Apart from reports
condemning it, the market value is still low, so many people
are looking at the company with interest for the long term,”
said Marcos Frange, a trader at the Hencorp Commcor brokerage.

The stock had lost 9 percent since the Sept. 23 share
offering that diluted existing investors and raised doubts
about the company’s future and concern about too much state
intervention.

A Citigroup analysis on Tuesday also argued that Petrobras
shares listed in New York could rise up to 58 percent in the
next 12 months, from Monday’s close of $32.21. [ID:nN26114284]

Brazilian steelmakers, however, suffered after
disappointing earnings from ArcelorMittal (ISPA.AS: ). The
world’s largest steelmaker cut its earnings guidance by about a
third as steel prices have fallen and costs risen.
[ID:nLDE69O0SQ]

Gerdau (GGBR4.SA: ) edged down 0.1 percent while Usiminas
(USIM5.SA: ) lost 0.35 percent. CSN (CSNA3.SA: ), Brazil’s largest
diversified steel group, led index losses with shares down 1.63
percent.

“If ArcelorMittal serves as a guide, the situation in
Brazil is probably worrying at this point,” said Hersz Ferman,
who helps manage about 105 million reais in assets for Yield
Capital hedge fund in Rio de Janeiro.

BES Securities, the investment banking arm of Portugal’s
Banco Espirito Santo, on Tuesday also recommended shares of
mining giant Vale over steelmakers. [ID:nN26122167]

Vale (VALE5.SA: ) gained 1.44 percent.

Vale’s net income is expected to more than triple in the
third quarter on strong iron ore prices and higher output
spurred by soaring demand from China. [ID:nN26269881]

MEXICO’S CEMEX JUMPS, HOMEBUILDERS LAG

Mexico’s IPC (.MXX: ) index added 0.31 percent to close at
its fourth consecutive life high at 35,373, helped by a jump in
Cemex (CMXCPO.MX: ) shares.

The world’s No. 3 cement maker soared 7.01 percent despite
reporting a third-quarter loss from continuing operations of
$86 million due to weak revenue in its key U.S. and European
markets. [ID:nN26116338]

“The market believes a floor in Cemex’s steep drop in sales
has now been reached,” said Gerardo Copca, a strategist at
Mexico City consultancy MetAnalisis.

The stock had lost 7.6 percent in the past month before
Tuesday’s surge.

Homex, one of Mexico’s leading homebuilders, lost 4.12
percent after S&P Equity Research cut the stock to sell from
hold.

Homex (HOMEX.MX: ) posted a flat third-quarter profit (Read more your timing to make a profit.) on
Monday as higher administrative costs and taxes cut into rising
revenue. [ID:nN25103641]

Urbi (URBI.MX: ), another homebuilder, lost 2.52 percent
after reporting a dip in third-quarter net profit on Monday due
to higher financing costs and losses on derivatives positions.

Chile’s blue-chip IPSA index (.IPSA: ) rose for the seventh
straight day on positive expectations for the upcoming earnings
season.

The IPSA rose 0.54 percent to 4,834 points, setting a new
high close for the first time in more than a month, after
hitting a string of new records from June to September.
(Additional reporting by Brad Haynes in Santiago and Silvio
Cascione in Sao Paulo; Editing by Dan Grebler)

EMERGING MARKETS- Latam stocks up as Petrobras aims for comeback