Ibovespa Futures Sink on Petrobras Output Decline, China Concern

Ibovespa futures fell after Brazil’s state-owned oil company Petroleo Brasileiro SA (PETR3) said crude and gas output dropped in May and as concern mounted that growth will falter in China, Brazil’s top trading partner.

Smiles SA (SMLE3), the frequent-flier unit of airline Gol Linhas Aereas Inteligentes SA, may move after it was rated the equivalent of buy in new coverage at JPMorgan Chase & Co. Education company Kroton Educacional SA may be active after saying it plans to buy back as many as 6.7 million shares over the next 12 months.

Ibovespa futures contracts expiring in August sank 1 percent to 44,405 at 9:27 a.m. in Sao Paulo. The real weakened 0.5 percent to 2.2665 per dollar.

“We expect a negative reaction from Petrobras shares on the back of weak production data in May,” JPMorgan’s analysts including Caio Carvalhal wrote in a note to clients.

Chinese stocks retreated as the country’s non-manufacturing purchasing managers’ index fell to 53.9 in June from 54.3 in May, according to a statement from the Beijing-based National Bureau of Statistics and the China Federation of Logistics and Purchasing.

The Ibovespa slumped into a bear market on June 11 after falling more than 20 percent from this year’s peak on Jan. 3. It has since extended those losses to 29 percent. Brazil’s benchmark equity gauge trades at 10.9 times analysts’ earnings estimates for the next four quarters, compared with 9.7 for the MSCI Emerging Markets Index of 21 developing nations’ equities.

Trading volume for stocks in Sao Paulo was 8.75 billion reais yesterday, compared with a daily average of 7.99 billion reais this year through July 1, 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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