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Bovespa Declines as Klabin Leads Raw-Material Producers Lower

The Bovespa index fell for a second day as paper maker Klabin SA led a decline among raw-material producers, outweighing gains by consumer stocks spurred by stronger-than-forecast retail sales.

Fibria Celulose SA, the world’s biggest pulp producer, tumbled the most in a month. Hypermarcas SA, the Brazilian maker of the generic forms of Valium and Claritin, led gains among companies that sell domestically.

The Bovespa slid 0.3 percent to 59,316.75 at the close of trading in Sao Paulo. Forty stocks fell while 27 advanced. The real weakened 0.6 percent to 2.0856 per U.S. dollar. The Standard & Poor’s GSCI index of 24 raw materials declined 0.8 percent.

Commodities fell after U.S. Federal Reserve Chairman Ben S. Bernanke said yesterday that the central bank’s plan to buy $45 billion a month of Treasuries will fail to offset the economic impact of spending cuts and tax increases set to take effect next year.

“Investors get more worried about the outlook for the U.S. the closer we get to the budget deadline,” Alvaro Bandeira, a partner at Orama Asset Management, said by phone from Rio de Janeiro. “With the whole world, Brazil included, struggling to boost growth, this budget issue in the U.S. becomes more and more relevant everyday.”

The prospect of more than $600 billion in spending cuts and tax increases is “clearly” having an effect on the economy, Bernanke said yesterday. U.S. House Speaker John Boehner said today the White House isn’t serious about cutting spending.

Retail Sales

Klabin sank 4.7 percent to 11.44 reais. Fibria dropped 3.6 percent to 22.17 reais.

Brazilian retail sales increased 0.8 percent in October from September, the national statistics agency said today in Rio de Janeiro. The median forecast of 33 economists surveyed by Bloomberg was for a 0.7 percent increase. Sales climbed 9.1 percent from a year earlier.

“What has been dragging Brazil’s recovery down is the manufacturing sector, but consumption seems to be holding on,” Joao Pedro Brugger, who helps oversee 220 million reais at Leme Investimentos in Florianopolis, Brazil, said by phone. “This means consumer stocks have room for further gains.”

Hypermarcas jumped 5.8 percent to 16.52 reais. The stock extended this year’s gain to 94 percent, the best performance on the Bovespa index after online retailer B2W Cia. Global do Varejo’s 104 percent rally.

Bovespa Valuation

The Bovespa index has climbed 13 percent from this year’s low in June as stimulus from central banks around the world eased concerns about an economic slowdown, while record-low benchmark lending rates has pushed some investors to move into stocks from fixed-income.

The index trades at 11 times analysts’ earnings estimates for the next four quarters, in line with the ratio for MSCI Inc.’s measure of 21 developing nations’ equities, data compiled by Bloomberg show.

Trading volume was 7.4 billion reais in stocks in Sao Paulo today. That compares with a daily average of 7.19 billion reais this year through Dec. 11, according to data compiled by the exchange.

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