Bovespa Futures Fall on China Rate Increase, Brazil Inflation

Bovespa stock-index futures fell, indicating the measure may drop for the second time in three days, after China’s interest-rate increase dimmed the outlook for commodity producers and Brazil’s inflation rose more than forecast.

Vale SA, the iron-ore producer whose top export market is China, may move as metals prices fell. Oil producers may be active after QGEP Participacoes SA, the energy exploration and production unit of Queiroz Galvao SA, said it’s raising less than it had initially projected in an initial public offering.

Bovespa futures fell 0.5 percent to 65,100 at 7:06 a.m. New York time. The real strengthened 0.2 percent to 1.6755 per dollar.

Brazil’s benchmark equity gauge increased 0.1 percent yesterday, holding near a five-month low, as economists reduced forecasts for Brazilian inflation, offsetting declines in oil producers.

China raised key interest rates for the third time since mid-October after growth accelerated and inflation stayed above 4 percent for a third month. The benchmark one-year lending rate and the one-year deposit rate will each rise 0.25 percentage point, the People’s Bank of China said on its website today.

Inflation

Prices in Brazil, as measured by the benchmark IPCA index, rose 0.83 percent last month, pushing the annual rate to 5.99 percent, the national statistics agency said today in Rio de Janeiro. The monthly gain, more than a 0.81 percent median estimate in a Bloomberg survey of 32 analysts, matched the November 2010 rate, which was the fastest since a 0.87 percent jump in April 2005.

QGEP is raising as much as 1.52 billion reais ($907.2 million) in an IPO. The company’s shares were priced at 19 reais each, less than the range of 23 to 29 reais estimated in the company’s Jan. 21 prospectus. The primary sale includes 69.3 million shares, plus a supplementary offering of as much as 10.4 million shares, according to a regulatory filing late yesterday.

Natura Cosmeticos SA, Brazil’s biggest cosmetics maker, may be active. Estee Lauder Cos., the maker of Mac cosmetics and Clinique skin care, may acquire a company in Brazil, Sao Paulo- based newspaper Valor Economico reported, citing Chief Executive Officer Fabrizio Freda.

Payment Processors

Cielo SA and Redecard SA, Brazil’s biggest card-payment processors, may move as Brazil’s government may increase the so- called IOF tax to more than 4 percent from the current 0.38 percent on credit-card purchases made outside the country, Folha de S.Paulo newspaper reported, without saying where it obtained the information.

Marfrig Alimentos SA may be active. Brazil’s second-biggest beef producer approved the use of as much as 100 million reais to buy back as many as 5.8 million shares, according to a regulatory filing.

Multiplan Empreendimentos Imobiliarios SA may move. The shopping-mall owner plans to invest an estimated 444 million reais in two commercial towers in Sao Paulo, according to a regulatory filing.

The Bovespa fell 5.7 percent this year through yesterday on concern rising inflation will spur additional measures to restrict credit growth. The index trades for 10.5 times analysts’ earnings estimates, the cheapest since March 2009, according to weekly data compiled by Bloomberg. That compares to a ratio of 13.1 for the Shanghai Composite Index, 7.4 for Russia’s Micex, and 17.1 for India’s Sensex.

To contact the reporters on this story: Alexander Cuadros in Sao Paulo at acuadros@bloomberg.net;

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

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