Bovespa Falls as B2W Sinks on Growth Concern; Homebuilders Rise

The Bovespa (IBOV) stock index fell for a third day as online retailer B2W Cia. Global do Varejo led consumer stocks lower on mounting concern that a deeper global slowdown will curb growth in Brazil.

Consumer product maker Hypermarcas SA tumbled to a four- month low. Banco Santander Brasil SA dropped the most in a month after newspaper O Estado de S.Paulo reported President Dilma Rousseff blocked the purchase of a minority stake in the lender by state-run competitor Banco do Brasil SA. Homebuilders rebounded after a report showed the country’s unemployment rate fell.

The Bovespa declined 1 percent to 54,063 at the close in Sao Paulo. Forty-seven stocks retreated on the gauge while seventeen advanced. The real strengthened 0.2 percent to 2.0292 per dollar after the central bank offered currency swap contracts at auction for a fourth day in a week.

“We’re seeing weak economic data all around the world, which adds to concern that Brazil will have more difficulties boosting domestic growth,” said Pedro Galdi, the head analyst at SLW Corretora brokerage. “The government announced some stimulus measures this week, but it’s not very clear if it will be enough to sustain a stronger recovery.”

European manufacturing and services output dropped in May, German business confidence declined and Britain’s first-quarter contraction was deeper than previously estimated, separate reports showed today. China’s biggest banks may fall short of loan targets for the first time in at least seven years as an economic slowdown crimps demand for credit, three bank officials with knowledge of the matter said.

B2W, Hypermarcas

B2W fell 6.1 percent to 6 reais, the lowest since March 2005. Hypermarcas, a maker of more than 190 consumer products, retreated 2.6 percent to 10.28 reais, the lowest in four months. Tobacco company Souza Cruz SA declined 1.8 percent to 25.85 reais.

Brazil earlier this week lowered banks’ reserve requirements and cut taxes for consumers buying new cars in an attempt to shore up growth in Latin America’s biggest economy.

A report from the national statistics agency today showed Brazil’s unemployment rate fell to 6 percent in April, from 6.2 percent in March. The rate was below the median forecast of 6.2 percent from 38 economists surveyed by Bloomberg.

The BM&F Bovespa Real Estate Index (IMOBBV) advanced 0.9 percent, paring this month’s decline to 12 percent.

“As these companies have fallen so much in the past weeks, investors began to look for bargains in the real estate sector, and data showing unemployment is stable help the outlook for homebuilders,” Luis Gustavo Pereira, an analyst at Futura Corretora, said by phone from Sao Paulo.

PDG, Rossi

PDG Realty (PDGR3), Brazil’s biggest home builder by revenue, rallied 11 percent to 3.41 reais, the biggest gain on the Bovespa, cutting this month decline to 24 percent. Rossi Residencial SA gained 5.1 percent to 5.57 reais.

Santander Brasil tumbled 4.9 percent to 15.80 reais. Rousseff blocked a purchase by Banco do Brasil of a minority stake in the lender to avoid more concentration in the banking industry, Estado reported today, without saying where it got the information. Santander, Banco do Brasil and Rousseff’s press office declined to comment.

Banco do Brasil gained 0.5 percent to 20.62 reais after earlier rising as much as 3.1 percent.

Bear Market

The Bovespa entered a bear market on May 17 after tumbling 21 percent from this year’s high on March 13 through that day. The gauge trades at 8.9 times analysts’ earnings estimates for the next four quarters, which compares with the 9.6 ratio for MSCI Inc.’s measure of 21 developing nations’ equities, data compiled by Bloomberg show.

“Stocks seem to be nearing a bottom,” Jason Vieira, an analyst at Cruzeiro do Sul Corretora, said by phone from Sao Paulo. “Even considering that there is concern about growth in Brazil and the external outlook is worrisome, the market’s reaction to these problems seems a bit exaggerated.”

Trading volume was 7.12 billion reais ($3.51 billion) in stocks in Sao Paulo today, data compiled by Bloomberg say. That compares with a daily average of 7.29 billion reais this year through May 23, 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

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