Ibovespa Falls to One-Week Low as BRF Drops on Growth Outlook

The Ibovespa (IBOV) fell for the second time in three days as BRF SA dropped with consumer stocks after economists covering Brazil cut their 2014 growth forecast to the slowest ever.

BRF, Brazil’s biggest food producer, sank the most since March, while frozen-dinner maker JBS SA (JBSS3) was the worst performer on the MSCI Brazil/Consumer Staples Index. Mining company Vale SA (VALE5) contributed the most to the gauge’s drop as iron-ore slid.

The stock index fell 1.2 percent to 53,353.10 at the close of trading in Sao Paulo, the lowest closing level since May 9, as 56 stocks declined while 14 climbed. The real appreciated 0.3 percent to 2.2073 per U.S. dollar at 5:29 p.m. local time.

“The economy’s fundamentals of higher inflation and low growth, which are negative for companies, are prevailing on the stock market today,” Eduardo Velho, the chief economist at INVX Global Partners, said in a phone interview from Sao Paulo.

Economists lowered their growth forecast for Brazil this year to 1.62 percent from 1.69 percent, according to the median of about 100 estimates in a weekly central bank survey published today. Inflation will quicken to 6.43 percent by year-end, the survey indicated.

BRF fell 2.6 percent to 50.65 reais. JBS retreated 2.8 percent to 7.78 reais. Cosmetics seller Natura Cosmeticos SA sank 2.2 percent to 39.13 reais, while the consumer index dropped 0.9 percent.

Vale declined 3.3 percent to 26.64 reais. Iron ore for immediate delivery fell $2.20, or 2.2 percent, to $98.50 a ton, according to a price index compiled by The Steel Index Ltd.

Pulpmaker Fibria Celulose SA (FIBR3) led declines on the MSCI Brazil/Materials Index as Goldman Sachs Group Inc. cut its recommendation on the stock to the equivalent of hold. The shares sank 4.7 percent to 20.95 reais.

The Ibovespa entered a bull market on May 7, surging 20 percent from this year’s low on March 14, as Petroleo Brasileiro SA rallied on speculation a change in government will reduce intervention in state-run companies.

Trading volume of stocks in Sao Paulo was 5.81 billion reais today, according to data compiled by Bloomberg. That compared with a daily average of 6.7 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 Rita Nazareth

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