Bovespa Stock Index Falls as Petrobras Follows Oil Prices Lower

The Bovespa (IBOV) stock index retreated for the first time in three sessions as a drop in commodities dimmed the outlook for Brazilian producers.

Petroleo Brasileiro SA (PETR4) declined, following crude lower. OGX Petroleo & Gas Participacoes SA, the producer controlled by billionaire Eike Batista, contributed most to the Bovespa’s drop after it denied a report from Exame magazine last week saying it was in talks to sell a stake in fields at the Campos basin. Banco do Brasil SA rallied after saying it plans to sell shares of its insurance unit in a public offering.

Brazil’s benchmark equity index lost 1.5 percent to 56,737.10 at the close of trading in Sao Paulo. Forty-nine stocks declined on the measure while 18 advanced. The Standard & Poor’s GSCI index of 24 raw materials slid 0.5 percent by 2:46 p.m. in New York amid concern Spain may postpone a request for a bailout and U.S. leaders prepared to wrestle with a budget agreement.

“The market is reversing some of the gains in the past few days, which may have been a bit excessive given that the external outlook is still problematic, considering everything that’s going on in Europe and in the U.S.,” Fernando Goes, an analyst at Clear Corretora brokerage in Sao Paulo, said in a phone interview.

Homebuilder PDG Realty SA Empreendimentos e Participacoes fell 5.4 percent to 2.82 reais, leading declines by companies that sell in the local market, as analysts covering Brazil lowered their 2012 and 2013 economic growth forecasts for the second straight week.

Brazil’s Economy

Latin America’s largest economy will grow 1.5 percent this year and 3.94 percent in 2013, according to the median estimate in a central bank survey of about 100 analysts published today. Analysts had forecast 1.52 percent and 3.96 percent expansion.

In the U.S., lawmakers tried to reach a compromise to avoid triggering $607 billion in automatic tax increases and spending cuts in January that the Congressional Budget Office said may lead to a recession. European stocks dropped as an election victory by pro-independence parties in the Spanish region of Catalonia muddled the outlook for the country’s financial rescue from the euro-area debt crisis.

Euro-area finance ministers will push the International Monetary Fund and central bankers to endorse new plans to save Greece from the fiscal abyss, seeking to overcome the latest impasse in the debt crisis and restart aid payments to Athens, Austria’s Maria Fekter said today.

“Brazilian stocks are tracking what’s happening abroad,” Pedro Galdi, the chief strategist at Sao Paulo-based brokerage SLW Corretora, said in a phone interview.

Petrobras, as Petroleo Brasileiro is also known, lost 1.8 percent to 18.82 reais. OGX sank 5.3 percent, the most in a month, to 4.61 reais.

Banco do Brasil

Banco do Brasil added 1.8 percent to 21.88 reais. The state-controlled bank said it plans to sell shares of its insurance unit, known as BB Seguridade, in 2013.

The Bovespa has climbed 8.1 percent from this year’s low on June 5 as stimulus from central banks around the world eased economic concern and borrowing costs at a record low in Brazil boosted demand for equities. The index trades at 10.3 times analysts’ earnings estimates for the next four quarters, compared with 10.6 times for MSCI Inc.’s measure of 21 developing nations’ equities, data compiled by Bloomberg show.

Trading volume was 5.22 billion reais ($2.51 billion) in stocks in Sao Paulo today, according to data compiled by Bloomberg. That compares with a daily average of 7.19 billion reais this year through Nov. 22, according to data compiled by the exchange.

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

To contact the editor responsible for this story: Brendan Walsh at bwalsh8@bloomberg.net

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