(Adds details on decree, background, updates stock)
SAO PAULO, May 8 (Reuters) - Shares in Brazilian gunmaker Taurus Armas SA surged on Wednesday, the day after President Jair Bolsonaro signed a decree to ease restrictions on gun imports and increase the amount of ammunition a person can buy.
Taurus stock surged 21 percent to 4.5 reais.
An earlier executive order signed by Bolsonaro had eased restrictions for collectors, marksmen and hunters, for example allowing them to carry loaded guns to shooting clubs.
The latest decree was expanded to lift a ban on imported arms if there was a similar domestic-made product. Taurus has a factory in Miami and may benefit from imports too.
Tuesday's decree raised a limit on ammunition purchases to 5,000 cartridges per year for normal guns. The previous cap was 50 cartridges per year for the average citizen, with discretionary limits for soldiers, police, hunters and some other categories left to the Brazilian military.
The decree also allows for up to 1,000 cartridges to be bought annually for use in restricted weapons, including large-caliber and semiautomatic weapons that are limited to military and police.
Taurus called the order a "milestone," and said it "could significantly increase the demand for firearms by hunters, shooters and collectors (CACs) and law-abiding citizens for their self-defense and defense of their property."
It added that it was "poised to meet any increase in demand."
Bolsonaro won office last year in part on a vow to end years of corruption and rising violence. He has pledged to show no mercy to violent gangs who have spread terror throughout Brazil, turning it into the world's murder capital.
Local and foreign arms and defense companies that had gathered for a security expo in Rio de Janeiro last month said they hoped the new government's crime crackdown would bolster sales, but also fretted about a weak economy and tough political climate.
"I think Brazil is in a better phase, and we think this government will really bring growth for our country, and ... things will improve," Taurus Chief Executive Officer Salesio Nuhs told Reuters at the time.
Bolsonaro said on Tuesday the decree would take effect in 30 days, allowing time for the Economy Ministry to consider tax issues for imported guns. (Reporting by Paula Arend Laier and Alberto Alerigi Jr.; Writing by Gabriel Stargardter; Editing by Chizu Nomiyama and Jeffrey Benkoe)