Ibovespa Falls on Speculation Fed Preparing to Curtail Stimulus

Dec. 11 (Bloomberg) --The Ibovespa (IBOV) dropped on concern the Federal Reserve is preparing to curtail a stimulus program that buoyed emerging-market assets.

Telecommunications company Oi SA (OIBR4) was the worst performer on the equity gauge. LLX Logistica SA (LLXL3), founded by former billionaire Eike Batista, advanced to a two-week high after its board approved changing the company’s name to Prumo Logistica Global as part of a restructuring.

The Ibovespa decreased less than 0.1 percent to 50,977.60 at 10:39 a.m. in Sao Paulo, with 37 stocks lower and 30 higher. The real weakened 0.9 percent to 2.3277 per U.S. dollar. Investors are considering when the Fed, which meets next week, will reduce the pace of its monthly bond buying. U.S. congressional negotiators agreed yesterday to a budget deal that would reduce the deficit by $23 billion.

“The market is still cautious before the decision about monetary policy in the U.S. next week,” Octavio de Barros, research director at Banco Bradesco SA, wrote in a research note to clients.

Oi dropped 1.3 percent to 3.66 reais. LLX added as much as 4.6 percent to 1.14 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 26 percent in dollar terms this year, compared with a decline of 4.6 percent for the MSCI Emerging Markets Index of 21 developing nations’ equities.

Trading volume of stocks in Sao Paulo was 4.2 billion reais yesterday, compared with a daily average of 7.47 billion reais this year, according to data available from the exchange.

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

To contact the editor responsible for this story: Brendan Walsh at bwalsh8@bloomberg.net

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