The Bovespa index fell to a one-month low as renewed concern that global growth will falter pushed Brazilian commodities producers lower and phone companies tumbled on speculation regulatory scrutiny will intensify.
Vale SA, the world’s largest iron-ore producer, contributed the most to the gauge’s decline after saying it will make provisions of 1.1 billion reais ($539 million) for a settlement of mining royalties claimed by the Brazilian government. The MSCI Brazil/Materials Index was the worst performer among 10 industry groups. Oi SA led losses by phone companies.
The Bovespa slid 1.8 percent to 56,233.90 at the close of trading in Sao Paulo. Fifty-nine stocks tumbled on the index while eight advanced. The real weakened 0.4 percent to 2.0416 per dollar at 5:24 p.m. local time.
“It’s all about the external outlook,” Hamilton Moreira, an equity strategist at Banco do Brasil SA, said by phone from Sao Paulo. “Manufacturing data in the U.S. released today were weak, and news coming from Europe hasn’t been good lately. Those things put pressure on commodities producers, which depend the most on exports.”
Global stocks fell as the Institute for Supply Management’s U.S. factory index dropped to 49.6 in August from 49.8 a month earlier. Economists in a Bloomberg survey projected an August reading of 50, which is the dividing line between expansion and contraction.
In Europe, the outlook for the European Union’s Aaa rating was cut to negative from stable yesterday following a report that showed euro-area manufacturing contracted in August more than initially estimated.
“While markets keep looking to policy makers, waiting for something to be done, fundamentals keep getting worse,” Rogerio Freitas, a partner at the Rio de Janeiro-based hedge fund Teorica Investimentos, said in a phone interview.
Vale dropped 2.9 percent to 32.12 reais. The company said in a filing it’s “likely” to lose the royalties dispute with Brazilian authorities. Vale also said it hired banks to sell bonds due in 2042.
Oil company Petroleo Brasileiro SA fell 1.2 percent to 20.43 reais, its sixth consecutive decline, as crude tumbled as much as 1.6 percent in New York.
Oi sank 3.3 percent to 7.65 reais. Tim Participacoes SA dropped 2.2 percent to 7.85 reais. Telefonica Brasil SA lost 1.8 percent to 44.43 reais. Brazil’s communications minister Paulo Bernardo said in an interview with Bloomberg News that wireless carriers must prepare for changes as the government puts consumers’ needs ahead of profits.
Positivo Informatica SA, Brazil’s biggest computer maker, surged 14 percent to 6.30 reais, the most in almost one year, after saying in a regulatory filing it will start making smartphones.
The Bovespa has climbed 7.2 percent from this year’s low on June 5 as eased concern about Europe’s crisis and borrowing costs at a record low in Brazil boosted demand for equities. The index trades at 11.7 times analysts’ earnings estimates for the next four quarters, which compares with the ratio of 10.7 times for MSCI Inc.’s measure of 21 developing nations’ equities, data compiled by Bloomberg show.
Trading volume was 6.13 billion reais in stocks in Sao Paulo today, data compiled by Bloomberg show. That compares with a daily average of 7.17 billion reais this year through Sept. 3, according to data compiled by the exchange.