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Bovespa-Index Futures Drop as Vale Posts Record Quarterly Loss

Bovespa-index futures declined, with the equity gauge poised for its biggest monthly drop since May, after iron-ore producer Vale SA (VALE3) posted a record loss in the fourth quarter.

Embraer SA (EMBR3), the world’s fourth-largest plane builder, may be active after winning a U.S. military contract valued at as much as $950 million in a partnership with Sierra Nevada Corp. Airline Gol Linhas Aereas Inteligentes SA (GOL) may move after saying its frequent-flyer unit Smiles filed a request with securities regulators to sell shares in an initial public offering.

Bovespa-index futures sank 0.3% to 57,410 at 9:05 a.m. in Sao Paulo. The Bovespa index is down 4.2 percent this month, poised for a second straight monthly decline. The real climbed 0.2 percent to 1.9698 per dollar.

Vale, the heaviest weighted stock on the Bovespa (IBOV) index, posted a fourth-quarter net loss of $2.65 billion, or 51 cents a share, compared with a profit of $4.67 billion, or 91 cents, a year earlier, the Rio de Janeiro-based company said late yesterday in a statement. Earnings before interest, taxes, depreciation and amortization, or adjusted Ebitda, declined 41 percent to $4.39 billion, missing a $4.79 billion average estimate by 14 analysts compiled by Bloomberg.

The benchmark equity gauge has dropped 9.5 percent from this year’s high on Jan. 3 amid concern that accelerating inflation may curb Brazil’s economic recovery and that the government’s interventionist policies will hurt profits in industries including utilities and energy. The MSCI BRIC Index (MXBRIC) of shares in Brazil, Russia, India and China has slid 3.9 percent over the same period.

Brazil’s benchmark equity gauge trades at 11.7 times analysts’ earnings estimates for the next four quarters, compared with 10.5 for the MSCI Emerging Markets Index (MXEF) of 21 developing nations’ equities, data compiled by Bloomberg show.

Trading volume for stocks in Sao Paulo was 7.86 billion reais yesterday, which compares with a daily average of 7.53 billion reais this year through Feb. 26, according to data compiled by 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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