Nov. 1 (Bloomberg) -- The Bovespa stock index posted the biggest two-day drop in a month as concern mounted that Brazil’s economy may falter after industrial production fell more than forecast and commodities slid.
MRV Engenharia & Participacoes SA, Brazil’s fifth-biggest homebuilder by revenue, paced declines for companies that depend on domestic demand. Miner Vale SA and oil producer Petroleo Brasileiro SA, the index’s heaviest-weighted companies, followed metals and crude prices lower. JBS SA, the world’s biggest beef producer, fell the most on the index on concern a weaker real is driving up the company’s debt-servicing costs.
The Bovespa retreated 1.7 percent to 57,322.75 at the close of trading in Sao Paulo, for a two-day decline of 3.7 percent. Fifty-seven stocks dropped on the index today while 10 rose. The real weakened 1.7 percent to 1.7450 per dollar. The benchmark equity index fell yesterday as economists cut Brazil’s growth forecasts and persistent concern about Europe’s debt crisis sent commodity producers lower.
“Investors may remain on the sidelines waiting for a clearer macroeconomic picture before allocating funds back into Brazilian equities again,” Carlos Sequeira, an analyst at Banco BTG Pactual SA, wrote in a note to clients today. “A stronger slowdown in the country’s economic activity could also lead to lower earnings estimates. Volatility and risk aversion have been the norm in recent months and this should remain the case in the months ahead.”
Brazil’s industrial production posted its second-steepest decline since 2008, the national statistics agency said today. Output fell 2 percent in September, more than all 38 estimates compiled by Bloomberg. It was the biggest fall since a 2.3 percent contraction in April and the second-most since a 12 percent plunge following the collapse of Lehman Brothers Holdings Inc. in 2008.
Commodities dropped amid concern Europe’s bailout effort may be derailed by a referendum in Greece and signals that Chinese consumption is slowing. A Chinese manufacturing index dropped to the lowest level since February 2009 as economic growth in the world’s biggest energy consumer slows. Greece’s Prime Minister called a referendum and a parliamentary confidence vote, putting the European Union bailout plan at risk if rejected by voters.
The Standard & Poor’s GSCI index of 24 raw materials declined 1 percent.
MRV lost 2.6 percent to 11.78 reais. Vale, the world’s largest iron-ore producer, slid 1 percent to 40.40 reais. State-controlled Petrobras dropped 0.9 percent to 21.13 reais. JBS plunged 8.3 percent to 4.73 reais.
The Bovespa entered a bull market last week after gaining more than 20 percent from a two-year low on Aug. 8 as cheap valuations and declining interest rates lured investors amid improving prospects for a solution to Europe’s debt crisis. The measure trades at 10.7 times analysts’ earnings estimates, compared to a ratio of 10.5 for MSCI Inc.’s gauge of 21 developing nations’ equities, weekly data compiled by Bloomberg show.
Traders moved 6.97 billion ($3.99 billion) reais in stocks in Sao Paulo today, data compiled by Bloomberg show. That compares to a daily average this year of 6.56 billion reais through Oct. 26, according to data from the exchange.
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