The Bovespa index fell, snapping a two-day advance, as lower oil prices pushed producer Petroleo Brasileiro SA (PETR4) down amid concern a bailout for Spain’s banks won’t be enough to stop Europe’s crisis from worsening.
Petrobras, as Petroleo Brasileiro is known, and OGX Petroleo (OGXP3) & Gas Participacoes SA contributed the most to the benchmark’s drop. Tam SA (TAMM4), Brazil’s biggest airline by market value, fell to a two-week low as a deadline loomed to tender shares for a swap that is part of its combination with Chile’s Lan Airlines SA. (LFL)
The Bovespa slid 0.8 percent to 54,001.44 at the close in Sao Paulo. The gauge earlier rose as much as 1.8 percent after Spain asked euro-region governments for as much as 100 billion euros ($125 billion) to help shore up its banking system. Forty stocks fell on the benchmark today while 28 advanced. The real weakened 1.8 percent to 2.0604 per U.S. dollar at 5:42 p.m. local time.
“It’s good news if Spain manages to avoid a banking crisis, but the fact that the country’s banks need that much money to keep their heads above water shows how bad things are in the region,” Felipe Casotti, who helps manage 800 million reais ($390 million) at Maxima Asset Management, said by phone from Rio de Janeiro. “Besides, avoiding a collapse in the financial system is just one of the many challenges Europe faces.”
Petrobras fell 2.6 percent to 18.39 reais. OGX tumbled 7.4 percent to 9.39 reais. Crude for June delivery dropped 1.7 percent in New York, reversing an earlier gain of 3 percent.
Some companies that sell in the local market declined as economists covering Brazil lowered their growth forecasts for a fifth week. Retailer Cia. Hering (HGTX3) fell 1.1 percent to 41.74 reais.
Cia. de Bebidas das Americas, Latin America’s largest brewer, dropped 0.9 percent to 73.82 reais. Clothing retailer Cia. Hering slid 1.1 percent to 41.74 reais.
“The outlook for growth in Brazil is not very bright,” Roberto Sevalli, a director at JMalucelli Investimentos in Curitiba, Brazil, said in a phone interview. “The government is trying to boost the recovery with some tax cuts and other stimulus measures, but I think it’s a bit too late to avoid a steeper slowdown. Those bad signs about economic activity help to push the Bovespa lower.”
Latin America’s largest economy will expand 2.53 percent this year, according to the median estimate in a central bank survey of about 100 analysts published today. A week earlier, analysts expected an expansion of 2.72 percent. Record low interest rates, tax breaks for companies and consumers and measures to boost credit won’t prevent growth from slowing in 2012, the survey shows. Last year, Brazil expanded 2.73 percent, its second-worst performance since 2003.
Tam fell 2.1 percent to 41.51 reais. Lan’s offer to swap shares in the Brazilian carrier that will later be merged into a company to be called Latam Airlines SA ends today. Any acquisitions of stock today won’t settle in time to make it into the swap, Cristian Jadue, an analyst at Banco Santander SA, said today from Santiago, Chile.
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 9.5 times analysts’ earnings estimates for the next four quarters, which compares with the 9.9 ratio for MSCI Inc.’s measure of 21 developing nations’ equities, data compiled by Bloomberg show.
Trading volume was 5.5 billion reais in stocks in Sao Paulo today, data compiled by Bloomberg show. That compares with a daily average of 7.2 billion reais this year through June 8, according to data from the exchange.
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