Ibovespa Falls as Rating Concern Outweighs Retail Sales Advance

The Ibovespa (IBOV) fell as concern that Brazil’s credit rating will be cut offset a surprise increase in retail sales and a rally by power utilities.

State-controlled oil producer Petroleo Brasileiro SA (PETR3) contributed the most to the gauge’s decline. Light SA (LIGT3), which generates and distributes electricity in the state of Rio de Janeiro, climbed the most on the BM&FBovespa Electric Energy Index as concern eased that utilities’ profits will be hurt by a drought that has cut production of hydroelectric power.

The Ibovespa retreated 0.5 percent to 45,651.20 at 12:41 p.m. in Sao Paulo. Forty-three stocks fell on the gauge while 28 gained. The real gained 0.1 percent to 2.3527 per dollar. Brazil’s central bank President Alexandre Tombini and directors will meet today with Standard & Poor’s analysts.

“The mood is very negative in the market now because investors fear that the agencies are preparing to downgrade Brazil,” Fernando Goes. “Positive news such as the increase in retail sales and industrial production earlier this week are not enough to change the perception that the economy is still weak.”

Brazil’s retail sales increased 0.4 percent in January from a month earlier, according to data from the national statistics bureau. The median estimate among 40 economists surveyed by Bloomberg was for a decline of 0.3 percent. Industrial production climbed 2.9 percent.

Petrobras, as Petroleo Brasileiro is known, lost 0.8 percent to 13.21 reais. Light added 4.3 percent to 17.29 reais while the power utilities index rallied 1.6 percent.

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

To contact the editors responsible for this story: Brendan Walsh at bwalsh8@bloomberg.net Dennis Fitzgerald, Richard Richtmyer

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