Bovespa Falls as Retailers Slide on Weaker-Than-Forecast Output

The Bovespa index retreated from a three-week high as a report showing industrial production growth trailed analysts’ estimates added to concern that Brazil’s economic recovery is sputtering.

Online retailer B2W Cia. Global do Varejo and its parent, Lojas Americanas SA, led declines among companies that sell in the domestic market. Cia. de Transmissao de Energia Eletrica Paulista rose the most in almost a month after agreeing to renew licenses under rules requiring it to cut power rates.

The Bovespa index slid 1.1 percent to 57,563.23 at the close of trading in Sao Paulo after ending yesterday’s session at the highest level since Nov. 7. Brazil’s industrial production rose 0.9 percent in October from a month earlier, the national statistics agency reported today. The median forecast of economists surveyed by Bloomberg was for an increase of 1.2 percent.

“Data regarding the manufacturing sector in Brazil show that the economy is not picking up as expected,” Luiz Roberto Marinho, an analyst at brokerage Renascenca, said by phone from Sao Paulo.

B2W slumped 5.1 percent to 15.27 reais. Lojas Americanas fell 3.9 percent to 18.13 reais.

Cteep, as Transmissao Paulista is also known, jumped 5.2 percent to 31.98 reais after the stock was raised to the equivalent of buy at Banco Itau BBA SA as analysts Marcos Severine and Mariana Coelho said the company will benefit from the conditions offered by the government.

‘Not Over’

“After some companies said they agree to the rules proposed by the government, some investors may be feeling more confident in taking advantage of the recent plunge we saw in most stocks in the industry,” Luis Gustavo Pereira, an analyst at Futura Corretora in Sao Paulo, said in a telephone interview. “Volatility should remain high. This issue is not over yet.”

Under terms of a government plan published Nov. 1, utilities whose concessions are set to expire from 2015 through 2017 will reduce electricity rates as President Dilma Rousseff tries to make local factories more competitive and spur growth.

The government offered additional compensation on Nov. 30 of 9.87 billion reais to utilities that accept Rousseff’s plan to renew licenses with lower rates, on top of 20 billion reais announced Nov. 1.

Centrais Eletricas Brasileiras SA declined 1.9 percent to 9.45 reais today after earlier jumping as much as 8.9 percent.

Marfrig Alimentos SA, Brazil’s second-biggest foodmaker, plunged 16 percent to 9.05 reais, the steepest drop in four months, before a planned sale of as many as 141.8 million new shares.

Tax Exemption

The real appreciated 0.2 percent to 2.1198 per dollar a day after the central bank intervened to stem the currency’s decline. Brazil exempted exporters today from a 6 percent tax on some loans after the real tumbled to a three-year low last week and a report showed the economy grew in the third quarter at half the pace expected by economists.

The Bovespa has climbed 9.7 percent from this year’s low on June 5 as stimulus from central banks around the world and Brazil’s record-low borrowing costs boosted demand for equities. The index trades at 10.6 times analysts’ earnings estimates for the next four quarters, compared with a ratio of 10.8 for MSCI Inc.’s measure of 21 developing nations’ equities, data compiled by Bloomberg show.

Trading volume was 7.02 billion reais in stocks in Sao Paulo today, according to data compiled by Bloomberg. That compares with a daily average of 7.17 billion reais this year through Aug. 7, according to data compiled by the exchange.

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