Ibovespa Falls for Second Day as Rossi Sinks on Brazil Inflation

The Ibovespa fell a second straight day as Brazil’s homebuilders sank after a report showing consumer prices increased more than forecast revived speculation that policy makers will keep raising borrowing costs.

Rossi Residencial SA (RSID3) dropped to a two-week low in the worst performance on the BM&FBovespa Real Estate Index. Voting shares of Centrais Eletricas Brasileiras SA (ELET3), the state-run utility known as Eletrobras, slumped the most in seven weeks. Usinas Siderurgicas de Minas Gerais SA fell after JPMorgan Chase & Co. cut the steelmaker to the equivalent of hold.

The Ibovespa slipped 1.7 percent to 50,779.32 at 10:48 a.m. in Sao Paulo, with 59 of its 73 members trading lower. The real weakened 0.3 percent to 2.2072 per U.S. dollar. Swap rates, a gauge of expectations for interest-rate moves, climbed as the national statistics agency reported that Brazil’s consumer prices rose 6.15 percent in the 12 months through March, faster than all of the forecasts of economists surveyed by Bloomberg.

“We haven’t seen any consistent signs that the Brazilian economy is in fact improving,” Marc Sauerman, a portfolio manager at J. Malucelli Investimentos, said in a phone interview from Curitiba, Brazil. “Equities have rebounded in the past few weeks, but that doesn’t mean that the outlook for Brazil has improved.”

The Ibovespa has gained 13 percent from this year’s low on March 14.

Rossi slipped 3.3 percent to 1.74 reais today. Eletrobras dropped 5.1 percent to 6.93 reais. Usiminas, as Usinas Siderurgicas is known, fell 5.7 percent to 9.04 reais.

To contact the reporter on this story: Ney Hayashi in Sao Paulo at ncruz4@bloomberg.net

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

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