Most Brazilian Stocks Fall as U.S. Jobs Stoke Stimulus Concern

Most Brazilian stocks dropped after a report showing U.S. companies added more workers than forecast rekindled speculation that the Federal Reserve will soon reduce stimulus that has boosted emerging-market assets.

Anhanguera Educacional Participacoes SA (AEDU3) tumbled as Brazil’s antitrust regulator sought concessions for the education company’s acquisition by Kroton Educacional SA. (KROT3) Some consumer stocks including retailer Lojas Renner SA (LREN3) advanced after data showing Brazil’s industrial output expanded faster than forecast in October eased concern that growth is faltering.

The Ibovespa lost 0.3 percent to 50,215.79 at the close of trading in Sao Paulo, with 47 stocks lower and 20 higher. The gauge fluctuated between a 0.8 percent gain and a 0.5 percent drop as the Fed outlook was offset by optimism triggered by Brazil’s industrial figures.

“What will happen with the stimulus program in the U.S. is still the main issue for global markets at the moment,” Alvaro Bandeira, a partner at Orama Asset Management, said by phone from Rio de Janeiro. “The industrial production figures were a bit positive, but economic data in Brazil have been a bit mixed, and it’s hard to see a pattern.”

The Ibovespa fell to a three-month low yesterday after a report showed gross domestic product contracted more than analysts forecast in the third quarter.

Signs of a weak economy increase the odds of a reduction in the nation’s credit rating as the government refrains from curbing spending, according to JPMorgan Chase & Co.

Rating Outlook

The “likelihood of a rating downgrade is now above 50 percent over the next six months,” JPMorgan economist Cassiana Fernandez wrote in a research note to clients yesterday. The bank cut Brazil’s economic growth forecast for this year to 2.3 percent from 2.5 percent.

Phone company Oi SA (OIBR4) jumped 11 percent to 3.74 reais, the biggest increase since July, after selling some transmission towers for 1.53 billion reais, an amount equivalent to about one-fifth of its market value.

Anhanguera fell 3.3 percent to 14.55 reais. Renner gained 0.8 percent to 60 reais.

Brazil’s benchmark equity index 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 29 percent in dollar terms this year, compared with a decline of 5.7 percent for the MSCI Emerging Markets Index of 21 developing nations’ equities.

Trading volume of stocks in Sao Paulo today was 6.4 billion reais, data compiled by Bloomberg show. That compares with a daily average of 7.51 billion reais this year through yesterday, according to data available from 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: Brendan Walsh at bwalsh8@bloomberg.net

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