(Bloomberg) -- The Ibovespa advanced to its highest level in seven weeks as gains in metals lifted miner Vale SA and steelmakers including Cia. Siderurgica Nacional SA.
Iron ore advanced on speculation that China, the main destination for Brazil's metals and commodity exports, will restrict output. Power utility CPFL Energia SA rallied to the highest since 2012 after State Grid Corp. of China agreed to acquire Camargo Correa SA's 23 percent stake at a 22 percent premium. Bradespar SA, a holding company that has Vale and CPFL as its main investments, climbed to the highest price since September.
The improved prospects for Brazil's material producers, which account for 22 percent of the Ibovespa's weighting, has encouraged investors to buy stocks as Acting President Michel Temer works to pull the country out of its worst recession in a century. The Ibovespa has gained 48 percent this year in dollar terms, the second-best performance among more than 90 primary equity gauges tracked by Bloomberg, on bets Latin America's biggest economy is getting back on track.
"The optimism regarding the outlook for the local market is prevailing," Paulo Henrique Amantea, an analyst at the brokerage Guide Investimentos, said from Belo Horizonte, Brazil. "There's a lot of good news for the companies today, fueling positive expectations over the demand for commodities and business opportunities in the country."
The Ibovespa added 0.6 percent to 52,568.66 at the close of trading in Sao Paulo, reaching the highest since May 12 as 38 of its 59 stocks rose. Vale climbed 2 percent and the steelmaker known as CSN gained 6.2 percent while rival Metalurgica Gerdau SA added 1.8 percent. CPFL jumped 8.5 percent after rising as much as 13 percent.
Frozen food maker BRF SA contributed the most to the index's gains after economists covering Brazil estimated the country will contract 3.35 percent this year, less than the 3.44 percent in the previous survey. Confidence is improving in the country as Temer's team, led by Finance Minister Henrique Meirelles and central bank head Ilan Goldfajn, announce plans to cut expenses and fight the stubborn inflation that has been eroding purchasing power.
To contact the reporter on this story: Denyse Godoy in Sao Paulo at dgodoy2@bloomberg.net. To contact the editors responsible for this story: Brendan Walsh at bwalsh8@bloomberg.net, Jessica Brice
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