Ibovespa Pares First Monthly Drop Since June as Petrobras Rises

The Ibovespa (IBOV) advanced, paring its first monthly decline since June, with oil company Petroleo Brasileiro SA (PETR4) rising from a one-month low as board members meet to discuss an increase in fuel prices.

Fibria Celulose SA (FIBR3), the world’s largest pulp producer, climbed after settling a tax dispute with Brazil over profits at its foreign units. Iron-ore producer Vale SA (VALE5) gained before a report due this weekend forecast to show manufacturing is still expanding in China, the company’s main export market.

The Ibovespa advanced 1.2 percent to 52,482.49 at the close of trading in Sao Paulo, reducing this month’s slump to 3.3 percent. The real weakened 0.8 percent to 2.3373 per U.S. dollar at 5:29 p.m. local time. Petrobras, as Petroleo Brasileiro is known, gained 2.5 percent to 19.12 reais as it seeks permission from the government to link domestic fuel prices to international levels.

“A new pricing policy for Petrobras would be a positive,” Rogerio Freitas, a partner at hedge fund Teorica Investimentos, said in a telephone interview from Rio de Janeiro. “It’s been very hard to find positive news coming from Brazil lately. On the other hand, equities already price in a lot of bad stuff.”

Vale increased 1.5 percent to 32.79 reais in a third day of gains, the longest rally since Nov. 4.

Fibria added 1.2 percent to 27.79 reais. In addition to joining Brazil’s tax settlement program, the pulp producer said it is selling land in Sao Paulo state to Votorantim Cimentos for 24 million reais. The decision removes an “uncertainty on the stock” and doesn’t jeopardize the company’s effort to restore the investment-grade rating it lost in 2009, according to Banco Itau BBA analysts including Marcos Assumpcao.

Year-to-Date

“It is a trigger for the stock as it could reduce Fibria’s financial expenses and cost of debt going forward,” the analysts wrote in a research note to clients today.

The Ibovespa entered a bull market Sept. 9 after rising 20 percent from this year’s low on July 3 through that day. The gauge is still down 25 percent in dollar terms this year, compared with a decline of 3.6 percent for the MSCI Emerging Markets Index of 21 developing nations’ equities.

Trading volume of stocks in Sao Paulo yesterday was 5.56 billion reais today, according to data compiled by Bloomberg. That compares with a daily average of 7.54 billion reais this year through Nov. 27, according to data available from the exchange.

To contact the reporters on this story: Ney Hayashi in Sao Paulo at ncruz4@bloomberg.net; Julia Leite in New York at jleite3@bloomberg.net

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

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