Bovespa Stock-Index Declines as Petrobras, Vale Follow Commodities Drop

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  • Posted on January 30, 2012


    Brazilian stocks fell for a second day as oil producer Petroleo Brasileiro SA (PETR4) and mining company Vale SA (VALE5) followed commodities lower amid renewed concern that Europe’s debt crisis will damp global growth.

    Petrobras, as Petroleo Brasileiro is known, and Vale, the world’s largest iron-ore producer, were among the biggest contributors to the Bovespa’s decline. Banks Banco Bradesco SA (BBDC4) and Itau Unibanco Holding SA (ITUB4) sank after each was cut to “neutral” from “overweight” at JPMorgan Chase & Co.

    The Bovespa index tumbled 0.8 percent to 62,398.5 at 11:21 a.m. in Sao Paulo. Fifty stocks dropped on the index, while 16 gained. The real weakened 0.6 percent to 1.7481 per U.S. dollar. The Standard & Poor’s GSCI index of 24 raw materials fell 0.5 percent.

    European Union leaders are gathering for their first summit of 2012 as a deteriorating economy and the struggle to complete a Greek debt write off risk sidetracking efforts to stamp out the financial crisis.

    “Again the focus is on Greece, and we’ll keep talking about this same issue over and over until some solution comes up,” Fausto Gouveia, who helps manage about 250 million reais ($143 million) at Legan Administracao de Recursos, said by phone from Sao Paulo. “Stocks linked to commodities end up suffering the most with all this uncertainty.”

    Petrobras fell 0.2 percent to 24.61 reais. Vale slid 1 percent to 40.91 reais.

    Bradesco sank 1.5 percent to 32.47 reais. Itau declined 1.8 percent to 35.46 reais.

    Brazil Inflation

    Brazil’s broadest price index rose less than economists forecast in January. The IGP-M index of wholesale, construction and consumer prices climbed 0.25 percent from December, the Getulio Vargas Foundation said on its website today. The median estimate of 29 analysts surveyed by Bloomberg was for an increase of 0.30 percent.

    The Bovespa has advanced 10 percent this year, buoyed by Brazil’s interest-rate cuts, signs of growth in the U.S. and renewed optimism Europe may be closer to solving its debt crisis. The gauge trades at 10 times analysts’ earnings estimates, in line with the ratio for the MSCI Inc.’s measure of 21 developing nations’ equities, weekly data compiled by Bloomberg show. Brazil’s benchmark equity gauge sank 18 percent in 2011.

    Traders moved 5.98 billion reais in stocks in Sao Paulo on Jan. 27, data compiled by Bloomberg show. That compares with a daily average of 6.49 billion reais in 2011, according to data from the exchange.

    To contact the reporter on this story: Ney Hayashi in Sao Paulo at ncruz4@bloomberg.net

    To contact the editor responsible for this story: David Papadopoulos in New York at papadopoulos@bloomberg.net

    Bloomberg/AC