By Carla Mozee, MarketWatch
LOS ANGELES (MarketWatch) — Brazilian stocks rose Monday, logging their first win in five sessions, as manufacturing activity reports for the country and from overseas pointed to stabilization, providing some optimism as global growth worries linger.
Mexican stocks also found strength from an unexpectedly higher reading of manufacturing activity in the United States, Mexico’s largest trading partner. Mexico’s IPC /zigman2/quotes/210597945/delayed MX:IPC +0.42% rose 0.6% to 41,124.56, the strongest close since mid-July, with shares of cement maker Cemex /zigman2/quotes/203703444/composite CX +5.64% up 1.5% and market heavyweight America Movil /zigman2/quotes/205846431/composite AMX +2.80% advancing 0.2%.
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Brazil’s Ibovespa equity index /zigman2/quotes/210597947/delayed BR:BVSP +3.08% rose 0.7% to 59,570.80, but came off session highs as shares of market heavyweight and miner Vale /zigman2/quotes/204339679/composite VALE +3.33% turned lower by 0.1%. Shares of Petrobras /zigman2/quotes/201811671/delayed BR:PETR4 +3.99% /zigman2/quotes/200745132/composite PBR +2.93% traded 0.6% higher as crude-oil futures advanced. November crude /zigman2/quotes/209727081/delayed CLX22 -0.43% settled up 29 cents, or 0.3%, at $92.48 a barrel.
Brazilian stocks pared gains after U.S. Federal Reserve Chairman Ben Bernanke defended the central bank’s recently announced plan for a third round of bond purchases. Bernanke said further quantitative easing was needed because of growth has been weak in the world’s largest economy. Bernanke also stressed that he’s not expecting a recession. See: Bernanke takes on critics of QE3.
Ahead of Bernanke’s speech, the Institute for Supply Management said its index of purchasing managers, or PMI, showed manufacturing activity resumed growing after three months of contractions. The index rose to 51.5 from 49.6 in August, a three-year low.
September’s reading was the highest since May. Economists surveyed by MarketWatch had forecast a fourth month of contraction at 49.7. A reading below the 50 indicates contraction. More on growth in U.S. manufacturing activity in September.
Separately, a survey of Brazil’s manufacturing sector in September showed a slower pace of contraction from the month earlier. The HSBC Manufacturing PMI edged up to 49.8 from 49.3 in August. Also, a slight increase in production in September marked the first month of expansion since March.
The pick-up in September’s manufacturing PMI “adds to recent evidence suggesting that policy stimulus is starting to take effect in Brazil,” Neil Shearing, chief emerging markets economist at Capital Economics, wrote to clients.
Capital Economics noted its doubt that the Brazilian economy will rebound as quickly as many expect, and held to its view that gross domestic product will expand by 3.5% next year. But Shearing said the central bank appears likely to end its cycle of monetary-policy easing later this month as stimulus efforts take effect and as concerns about higher food inflation intensify.
Brazil began cutting the key interest rate in August 2011 as worldwide economic growth outlooks deteriorated. The key rate was cut from 12.5% to the current rate of 7.5%.
Meanwhile, China — Brazil’s largest trading partner — overnight said manufacturing activity contracted for a second straight month in September. The official PMI was 49.8 compared with 49.2 in August.
But some analysts said some indicators pointed to stabilizing conditions from lows reached in August. SocGen economist Yao Wei said in a note she saw “some green shoots” in the data, as readings for four of the six major sub indexes showed “clear signs of recovery.” Read about Chinese manufacturing activity in September.