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Brazilian Stocks Fall on Global Growth Concern, Commodities Drop

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March 22 (Bloomberg) -- The Bovespa index fell the most in two weeks after reports that showed manufacturing contracted in China and Europe dimmed the outlook for global growth and Brazilian exports.

Vale SA, the world’s largest iron-ore producer, whose top export market is China, dropped the most in two weeks. JBS SA, the world’s biggest beef producer, sank 7.1 percent after fourth-quarter earnings trailed analysts’ estimates.

The Bovespa slid 1.5 percent to 65,828.19 at the close of trading in Sao Paulo. Fifty-two stocks fell on the index while 18 rose. The real was little changed at 1.8177 per U.S. dollar. The S&P GSCI Spot Index of 24 commodities declined 1.1 percent.

“Weaker data in China and Europe weighed on the market,” Marc Sauerman, who helps oversee about 650 million reais ($356 million) at JMalucelli Investimentos in Curitiba, Brazil, said by phone. “China still has some room to adjust monetary and fiscal policies to shore up growth. Still, figures like those released today make investors more cautious, especially considering how Brazil depends on commodities exports.”

A preliminary measure of Chinese manufacturing fell to 48.1 this month, the lowest reading since November. A result below 50 indicates a contraction. A gauge of European manufacturing dropped to 47.7 as factory output unexpectedly shrank in Germany and France, a separate report showed.

Vale lost 2.1 percent to 40.60 reais.

Brazil Inflation Slows

The manufacturing data from Europe and China outweighed a report showing that Brazilian inflation slowed more than economists forecast in mid-March, spurring traders to increase bets for lower borrowing costs in Latin America’s biggest economy.

Prices, as measured by the IPCA-15 index, rose 0.25 percent through mid-March, the smallest increase in eight months and down from a 0.53 percent jump a month earlier. That was less than estimated by all 42 analysts surveyed by Bloomberg, whose median estimate was for a 0.38 percent increase. Annual inflation slowed to 5.61 percent, the lowest since 2010.

“Stocks linked to the local market still show some potential, as the outlook for the Brazilian economy is good, with interest rates falling. There’s room for further gains if there is no more bad news from abroad, which could push the whole equity market down,” Sauerman said.

JBS Earnings

JBS fell 7.1 percent to 7.60 reais after the company reported net income of 25.6 million reais in the fourth quarter, which compares with the average estimate of 189.9 million reais among seven analysts surveyed by Bloomberg.

Tecnisa SA lost 1.9 percent to 9.55 reais after it reported a fourth-quarter net loss of 32 million reais. The company was forecast to report net profit of 51.1 million reais, according to the average estimate of three analysts surveyed by Bloomberg.

T4F Entretenimento SA, the Brazilian live-entertainment company whose name stands for Time For Fun, climbed 4.7 percent to 16.96 reais after Raymond James & Associates Inc. rated it outperform, which means the stock is expected to rise between 15 percent to 25 percent in the next year.

The Bovespa has advanced 16 percent this year after slumping 18 percent in 2011, buoyed by interest-rate cuts in Brazil, signs of growth in the U.S. and speculation Europe may be closer to solving its debt crisis. The gauge trades at 11 times analysts’ earnings estimates, which compares with a 10.7 ratio for MSCI Inc.’s measure of 21 developing nations’ equities, weekly data compiled by Bloomberg show.

Traders moved 6.75 billion reais in stocks in Sao Paulo today, data compiled by Bloomberg show. That compares with a daily average of 7.19 billion reais this year through March 15, according to data from the exchange.

To contact the reporter on this story: Ney Hayashi in Sao Paulo at ncruz4@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net

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