Bovespa Pares Biggest Monthly Loss Since ’08 on Europe

The Bovespa (IBOV) index rose, paring its worst monthly drop in three years, after a poll showing support for pro-bailout parties in Greece eased concern that a worsening crisis in Europe would erode demand for Brazilian equities.

Klabin SA, Latin America’s biggest paper maker, rose the most in almost three months after saying it’s spending 220 million reais ($109 million) on new machinery to boost output, spurring Banco BTG Pactual SA to raise its recommendation to buy. OGX Petroleo & Gas Participacoes SA fell for a third day as crude dropped amid concern global growth will falter.

The Bovespa gained 1.3 percent to 54,490.41 at the close in Sao Paulo. The gauge dropped as much as 1.3 percent earlier following a report that showed Brazil’s industrial production contracted for a second straight month in April. The measure is down 12 percent this month.

“The Greek poll was very important to reverse some of the pessimism in the market,” said Fausto Gouveia, who helps manage 380 million reais at Legan Administracao de Recursos in Sao Paulo. “If a new Greek government manages to keep the country in the euro zone, it may help to stop the crisis from spreading further.”

A Greek opinion poll before June 17 elections showed New Democracy, the largest pro-bailout party, leading Syriza, which has called for the cancellation of the country’s bailout terms. Of 1,128 people surveyed by Marc SA for Athens-based Alpha TV, 26 percent said they would vote for New Democracy, 24.3 percent for Syriza and 12.5 percent for the Pasok party, which also supports the bailout program.

Factory Production

In Brazil, industrial output fell 0.2 percent in April after dropping 0.5 percent in March. Economists expected output levels to remain unchanged from the previous month, according to the median of 48 estimates compiled by Bloomberg. Output declined 2.9 percent from a year ago.

“Industrial production figures were pretty bad, which shows the outlook for growth in Brazil is tough,” Luis Gustavo Pereira, an analyst at Futura Corretora, said by phone from Sao Paulo. “Growth is still likely to accelerate in the second half of the year, but maybe not as fast as we expected.”

Airline Gol Linhas Aereas Inteligentes SA (GOL) lost 4.3 percent to 8.04 reais, the biggest drop among companies that depend on domestic demand.

Cosan SA Industria e Comercio, which shares control of the world’s biggest sugar-cane processor, added 3.1 percent to 29.96 reais. Net income of 149.6 million reais in the quarter ended March 31 exceeded analysts’ estimates for profit of 133 million reais excluding some items, according to the average of four forecasts compiled by Bloomberg.

Klabin, OGX

Klabin jumped 4.8 percent to 8.50 reais.

OGX, the oil company controlled by billionaire Eike Batista, slid 1.1 percent to 10.30 reais, extending a three-day tumble to 9.8 percent.

Crude capped the biggest monthly drop in three years in New York on speculation slowing U.S. growth and Europe’s debt crisis will reduce fuel demand.

The Bovespa entered a bear market on May 17 after tumbling 21 percent from this year’s high on March 13 through that day. It has since pared the decline to 20 percent. The gauge trades at 9.2 times analysts’ earnings estimates for the next four quarters, which compares with the 9.8 ratio for MSCI Inc.’s measure of 21 developing nations’ equities, data compiled by Bloomberg show.

Trading volume was 10.16 billion reais in stocks in Sao Paulo today, data compiled by Bloomberg show. That compares with a daily average of 7.22 billion reais this year through May 30, 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 at papadopoulos@bloomberg.net

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