The Ibovespa (IBOV) dropped as Brazil’s credit rating outlook was cut to negative by Standard & Poor’s, which cited sluggish economic growth.
State-controlled oil company Petroleo Brasileiro SA (PETR3) and government-run power utility Centrais Eletricas Brasileiras SA slumped as S&P also revised their credit outlooks to negative. Homebuilder Gafisa SA (GFSA3) rallied after agreeing to sell Alphaville Urbanismo SA to AE Investimentos.
The Ibovespa fell 1.1 percent to 52,318.29 at 10:26 a.m. in Sao Paulo, extending this week’s decline to 2.2 percent and the yearly drop to 14 percent.
“The decline this year is based on the same reasons S&P pointed out to justify its decision, so the agency is confirming investors’ perceptions,” Marcel Kussaba, the head of equity research at Quantitas Asset Management, said in a phone interview from Porto Alegre, Brazil.
Petrobras, as Petroleo Brasileiro is known, fell 2 percent to 19.07 reais. Eletrobras declined 3.7 percent to 9.15 reais. Gafisa rallied 1.5 percent to 4.13 reais.
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