Shares of the iShares MSCI Brazil Index Fund (EWZ), the largest ETF tracking Latin America's largest economy, are trading higher by nearly one percent after getting some help from one of its controversial and downtrodden constituents.

The ETF is getting a lift as shares of Petrobras (PBR), Brazil's state-run oil producer, are up nearly four percent on volume that has already eclipsed the daily average. Petrobras is up on reports the company has hired Scotiabank Brasil to sell its Argentine unit, Petrobras Argentina (PZA). Shares of Petrobras Argentina are up 6.2 percent on the news.

Petrobras has reportedly held talks with four Argentine oil companies inlcuding Tecpetrol, Pluspetrol, Bridas and the previously nationalized YPF S.A. (YPF), according to Dow Jones.

There is speculation that proceeds from the sale of its Argentine unit could be distributed to Petrobras shareholders in the form of dividends.

The company's U.S.-listed shares currently yield just 1.3 percent, well below the dividend yields on other major integrated oil stocks ranging from Exxon Mobil (XOM) to Royal Dutch Shell (NYSE: RDS-A) to BP (BP).

The struggles of Petrobras have been a primary reason EWZ has stumbled this year. Two Petrobras securities combine for 14 percent of the ETFs weight. Amid rising cuts, lower production and seemingly never-ending disappointments for investors, Petrobras has plunged 21.1 percent this year.

EWZ's year-to-date loss of about 5.6 percent is not nearly as bad, but the oil giant's weight in the ETF has made the fund the worst 2012 performer of the four major ETFs tracking the BRIC nations. The gap between EWZ and the next-worst BRIC country-specific ETF is wide as the Market Vectors Russia ETF (RSX) is up 10 percent year-to-date.

The woes of Petrobras, and by virtue EWZ, have not gone unnoticed. Last month, noted short seller Jim Chanos called Petrobras and Vale (NYSE: VALE) two of his favorite shorts. Brazil's Vale is the world's largest iron ore producer and accounts for almost 12 percent of EWZ's weight.

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