Ibovespa Drops With Petrobras as Recent Rally Deemed Excessive

The Ibovespa (IBOV) fell for a third straight day as a rally on prospects a new government would ease intervention in state-run companies was considered excessive four months before the election.

Petroleo Brasileiro SA, which is known as Petrobras, contributed the most to the gauge’s decline. Cetip SA, Brazil’s biggest clearinghouse, slid after Banco Bradesco SA’s brokerage unit cut its recommendation to the equivalent of hold.

The Ibovespa retreated 0.6 percent to 54,299.95 at the close of trading in Sao Paulo, extending its three-day drop to 1.5 percent. The gauge entered a bull market on May 7, surging 20 percent from this year’s low, as Petrobras was buoyed by polls showing reduced support for President Dilma Rousseff’s re-election in October.

“Petrobras and other state-controlled companies rose as investors bet that Rousseff will lose her re-election bid,” Henrique Kleine, the head equity analyst at brokerage Magliano SA in Sao Paulo, said in a telephone interview. “But the election is in October, so it’s too early to say. We’re seeing the market adopting a more cautious attitude.”

Non-voting shares of Petrobras slumped 2.2 percent to 18.32 reais in its biggest drop since May 30. The stock accounts for about 8 percent of Ibovespa’s weighting. Cetip decreased 2.1 percent to 31.10 reais.

Stock trading at BM&FBovespa ended at 1:30 p.m. local time today for the World Cup match between Brazil and Mexico.

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, Rita Nazareth

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