Bovespa Falls to Seven-Week Low as Drop in Commodities Saps Vale

The Bovespa slid to a seven-week low as a drop in commodities dimmed the outlook for Brazilian producers after disappointing corporate earnings in the U.S. and Europe rekindled concern the global recovery will falter.

Iron-ore producer Vale SA and oil company Petroleo Brasileiro SA contributed the most to the gauge’s decline as metals and crude sank. Itau Unibanco Holding SA, Latin America’s biggest bank by market value, fell after posting a 13 percent drop in third-quarter profit following an increase in bad-loan provisions. Marfrig Alimentos SA tumbled the most on the Bovespa on speculation it will follow rival Minerva SA and sell new shares to shore up cash.

The Bovespa lost 1.7 percent to 57,690.24 at the close of trading in Sao Paulo, the lowest since Sept. 5. The real weakened 0.1 percent to 2.0269 per U.S. dollar. The Standard & Poor’s GSCI index of 24 raw materials slid 1.4 percent as companies from London-based handbag maker Mulberry Group Plc to chemical producer DuPont Co. reported earnings that were lower than analysts forecast.

“Commodities producers can’t get any higher given the negative outlook for the global economy,” Fernando Goes, an analyst at Clear Corretora brokerage, said by phone from Sao Paulo. “Unless there’s some surprise, I don’t see anything that could spark a rebound in stocks in the short term.”

Vale fell 2.4 percent to 34.56 reais. Petrobras, as Petroleo Brasileiro is known, slid 1.7 percent to 21.67 reais.

Itau lost 3.2 percent to 28.42 reais. Recurring net income, excluding one-time charges, fell to 3.41 billion reais ($1.68 billion) in the third quarter from 3.94 billion reais a year earlier, the Sao Paulo-based bank reported today.

‘Bad Numbers’

“In a day like today, with no major economic data being released either in Brazil or abroad, investors are watching corporate earnings,” Henrique Kleine, the chief analyst at Magliano SA brokerage, said by phone from Sao Paulo. “So far, companies in Brazil have posted bad numbers, like Itau today.”

BR Properties SA slid 2.1 percent to 27.41 reais, retreating from a record high, after Citigroup Inc. lowered its recommendation to the equivalent of hold.

Marfrig, Brazil’s second-biggest food company, plunged 9.8 percent to 10.45 reais, the steepest decline in more than one year.

The Bovespa has climbed 9.9 percent from this year’s low on June 5 as stimulus from central banks around the world eased economic concern and borrowing costs at a record low in Brazil boosted stock demand. The index trades at 15 times analysts’ earnings estimates for the next four quarters, which compares with the ratio of 11.5 times for MSCI Inc.’s measure of 21 developing nations’ equities, data compiled by Bloomberg show.

Trading volume was 6.94 billion reais in stocks in Sao Paulo today, which compares with a daily average of 6.94 billion reais this year through Oct. 19, according to data compiled by the exchange.