Ibovespa Falls as China Manufacturing Signs Drag on Vale

The Ibovespa (IBOV) declined for a second day as commodities dropped following a report indicating that manufacturing contracted further in China, Brazil’s biggest trading partner.

Iron-ore producer Vale SA fell to its lowest level in four weeks, contributing the most to the gauge’s decline. Pulp producer Fibria Celulose SA was the worst performer on the MSCI Brazil/Materials Index. Drugstore chain Raia Drogasil SA (RADL3) retreated after Banco Itau BBA SA withdrew a buy recommendation for the stock.

The Ibovespa lost 0.8 percent to 51,569.69 at the close of trading in Sao Paulo, with 59 stocks lower and 14 higher. The real gained 0.5 percent to 2.2267 per U.S. dollar at 5:22 p.m. local time. The Bloomberg Base Metals 3-Month Price Commodity Index fell 0.2 percent as a preliminary reading of the purchasing managers’ index from HSBC Holdings Plc and Markit Economics showed that manufacturing in China contracted for a fourth straight month.

“Investors are anticipating lower purchases of materials from Brazil,” Paulo Brito, an investment manager at the brokerage firm HPN Invest, said by phone from Recife, Brazil. “China is a very important client for Brazil’s exports.”

Vale dropped 1.2 percent to 27.70 reais, its lowest level since March 26. Fibria fell 2.8 percent to 22.64 reais. Raia Drogasil slumped 2.1 percent to 18.52 reais.

Trading volume of stocks in Sao Paulo today was 6.12 billion reais, according to data compiled by Bloomberg. That compares with a daily average of 6.76 billion reais this year, according to data from the exchange.

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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