Ibovespa Declines on Speculation U.S. Fed Will Curtail Stimulus

The Ibovespa dropped as speculation that the U.S. Federal Reserve will cut stimulus measures sooner than expected offset slower-than-forecast inflation in Brazil.

Mobile carrier Tim Participacoes SA (TIMP3) sank the most on the stock gauge after parent company Telecom Italia SpA (TIT)’s chief executive officer said its Brazilian assets are strategic, damping speculation that the unit will be sold.

Brazil’s benchmark equity index dropped 0.9 percent to 52,299 at 11:41 a.m. in Sao Paulo, extending its weekly decline to 3.1 percent. Fifty-nine of its 72 member stocks fell. The real weakened 1.2 percent to 2.3336 per dollar.

The Ibovespa extended its decline after a report in Washington showing U.S. payrolls increased more than forecast in October stoked speculation that Fed policy makers will dial back monetary stimulus that has helped boost demand for emerging-market assets. The Commerce Department said yesterday that the world’s largest economy grew at a better-than-estimated 2.8 percent annual rate in the third quarter.

“All attentions are focused” on when the Fed will trim stimulus, Felipe Rocha, an analyst at the brokerage firm Omar Camargo, said in a phone interview from Curitiba, Brazil. “The reduction in liquidity in the world should be negative for Brazil.”

In Brazil, the Getulio Vargas Foundation said wholesale, construction and consumer prices climbed 0.30 percent in the 10 days starting Oct. 21. The median forecast of 12 economists surveyed by Bloomberg was for an increase of 0.59 percent.

Tim slumped 5.6 percent to 10.44 reais, the biggest drop on a closing basis since July 2012.

To contact the reporter on this story: Denyse Godoy in Sao Paulo at dgodoy2@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net

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