Steel companies like Usiminas, known as Usinassiderurgicas in Minas Gerais, benefited most from the increase in metal prices among raw material producers. Localiza car rental, the largest car rental company in Latin America, led gains among companies that depend on domestic consumption.
Brazil's benchmark index climbed 1.3% to 66,654.5 by 1:35 PM in Sao Paulo. This level is the highest since April 26. Fifty-six stocks advanced, while 11 declined. The real strengthened 0.4% to 1.7115 per dollar. Industrial metals and base metal prices rose alongside the Bloomberg Commodity Index (CMDIBAS3) by 0.9%, following an increase in China’s purchasing managers' index for a third month in February.
“Economic activity in China should remain strong, at least in the short term, maintaining demand for Brazilian products,” said Marc Sauerman, who helps oversee 650 million reais ($380 million) at JMalucelli Investimentos in Curitiba, Brazil, in a telephone interview. In Brazil, “policy makers have indicated they will continue lowering interest rates, which should continue to drive the stock market higher.” Usiminas, as Usinassiderurgicas is commonly known, climbed 2.4% to 11.93 reais.
Interest rate prospects!
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In the interest rate futures market, yields fell on most contracts. Yields on contracts expiring in January 2013 dropped 10 basis points, or 0.1 percentage point, to 9.13%. Brazil announced today it will tax foreign exchange loans and bonds issued by local companies maturing in three years or less, in an attempt to stop the appreciation of its currency, which could be a sign that policy makers might take other measures, including lowering borrowing costs, to curb the rally, said Luciano Rostagno, chief strategist at Deutsche Bank's Brazil unit.