Brazilian Stocks Fall as MMX Drops on Commodities Decline

The Bovespa index fell for a third day as mining company MMX Mineracao & Metalicos SA (MMXM3) led Brazilian commodity exporters lower amid concern that slower growth in Europe will sap demand for raw materials.

The MSCI Brazil/Materials dropped the most among 10 industry groups. Power utility Cia. Energetica de Minas Gerais advanced after yesterday posting its biggest one-day plunge in 12 weeks.

The Bovespa declined 0.6 percent to 55,671.40 at 10:44 a.m. in Sao Paulo. Forty-four stocks dropped on the measure while 23 advanced. The real was little changed at 1.9894 per dollar. The Standard & Poor’s GSCI index of 24 raw materials slid 0.4 percent after a report showed German manufacturing unexpectedly contracted this month.

“There’s concern that things in Europe will take a turn to the worse, and the Bovespa is tracking this bad mood,” Pedro Galdi, the chief strategist at Sao Paulo-based brokerage SLW Corretora, said in a phone interview. “When you look at valuation, the Bovespa is not really cheap, and with things getting worse abroad, investors get worried.”

Brazil’s benchmark equity gauge trades at 11.3 times analysts’ earnings estimates for the next four quarters, compared with 10.7 for the MSCI Emerging Markets Index (MXEF) of 21 developing nations’ equities, data compiled by Bloomberg show.

MMX fell 2.8 percent to 2.77 reais. Steelmaker Cia. Siderurgica Nacional SA (CSNA3) lost 2.3 percent to 9.20 reais.

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