Brazilian stocks erased earlier declines on speculation that a bill to tax payments to shareholders will be shelved. The real led gains among Latin American currencies.

The Ibovespa rose for the first time in six days after Valor Economico newspaper reported that Senator Gleisi Hoffmann may withdraw a proposal to tax interest on capital payments. The report didn’t mention where it got the information. Her press office didn’t immediately respond to a request for comment from Bloomberg.

“If this proposal doesn’t go forward, companies that rely a lot on this instrument to pay shareholders will benefit,” Luis Gustavo Pereira, an analyst at brokerage firm Guide Investimentos, said from Sao Paulo. “After so many negative days for the Ibovespa, even something small is enough to spark a rebound.”

Companies in Brazil are allowed to deduct the so-called interest on capital paid to shareholders from their income tax. Hoffmann’s proposal is to end this exemption as part of a broader initiative from the federal government, which has been struggling to curb expenses and boost revenue amid its widest budget deficit in at least 15 years.

The stock gauge rose 0.5 percent to 47,450.58 at the close of trading Tuesday, after earlier slumping as much as 1.2 percent. Itau Unibanco Holding SA, Latin America’s biggest bank by market value contributed the most to the index’s advance. The real added 0.4 percent to 3.4674 per dollar.

Moody’s Report

The stock gauge dropped earlier Tuesday after Moody’s Investors Service said the outlook for Latin America’s largest economy is worsening.

“Moody’s isn’t the only one predicting that growth will be slow to rebound,” said Ari Santos, a trader at Sao Paulo-based brokerage H.Commcor. “Looking forward, we’ll have a stagnant economy, with no growth and no outlook to grow.”

A central bank survey published Monday showed economists forecast Brazil to endure a two-year recession for the first time since the Great Depression, with gross domestic product expected to shrink by 2.01 percent in 2015 and by 0.15 percent in 2016.

A decline in commodities and economic pessimism surrounding China also triggered a slide in Brazilian stocks and the real earlier Tuesday.

“Commodities are our main bread winner,” said Reginaldo Galhardo, a foreign-exchange manager at brokerage Treviso Corretora de Cambio in Sao Paulo. “A drop translates into weaker inflows to Brazil. Investors also don’t want to bring their money to Brazil and be a hostage to the political crisis.”