Bovespa Index Retreats on Inflation Concern, Commodity Decline

Brazil’s Bovespa stock index fell for a third time in four days as commodity prices retreated and quicker-than-forecast inflation spurred speculation policy makers will raise borrowing costs to cool the economy.

MMX Mineracao & Metalicos SA, the iron-ore producer controlled by Brazilian billionaire Eike Batista, slipped as metals prices retreated. PDG Realty SA Empreendimentos & Participacoes led a drop for homebuilders after consumer prices rose through mid-September, ending a two-month period of deflation. Petroleo Brasileiro SA, Brazil’s state-controlled oil company, fell the most in a week as crude tumbled.

The Bovespa index fell 0.7 percent to 67,719.13. Forty-five stocks fell on the index while 22 rose. The BM&FBovespa Small Cap index slipped 0.4 percent to 1,336.99. The real strengthened 1.2 percent to 1.7122 per dollar.

“It’s a month of pressure, a period of slightly higher inflation,” said Alvaro Bandeira, director of Rio de Janeiro- based Agora Corretora, Brazil’s second-biggest brokerage. “I don’t think it’s a trend.”

Brazil’s consumer prices as measured by the IPCA-15 index rose 0.31 percent through mid-September, the statistics agency said. Economists surveyed by Bloomberg had expected prices to rise 0.24 percent over mid-August, according to the median forecast of 35 analysts.

Oil Falls

Oil fell to the lowest level this month before a government report that may show U.S. refineries operated at their lowest rate in five months, signaling less demand for crude to process into fuels.

PDG Realty declined 2.6 percent to 19.75 reais, pushing the BM&FBovespa Real Estate Index down 1.2 percent. MMX decreased 2 percent to 13.04 reais. Petrobras dropped 2.8 percent to 26.35 reais.

“We continue to have opposite growth expectations for Brazil and the world,” Carlos Constantini, a strategist at Itau Unibanco Holding SA, wrote in a note to clients. “Brazil’s domestic consumer market continues to flourish due to the powerful combination of low unemployment rates, rising income and the formalization of the economy.”

The U.S. has fallen behind emerging markets in Brazil, China and India as the preferred place to invest, a Bloomberg survey shows, though the world’s largest economy still ranks highest of all major developed countries.

The Bovespa gained the most in a week yesterday after Goldman Sachs Group Inc. said the measure will rally to a record this year, and economists increased forecasts for economic growth.

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