Bovespa Futures Fall After Biggest Two-Day Gain Since September

Bovespa-index futures fell on speculation gains in the last two sessions were excessive as a U.S. budget deal may not reduce the deficit enough to avoid a ratings downgrade in Brazil’s second-biggest trading partner.

Iron-ore producer Vale SA, which has the biggest weighting on the Bovespa, declined in Frankfurt trading. State-controlled Petroleo Brasileiro SA may be active after confirming “high potential of oil flow” in a Carcara well.

Bovespa futures retreated 0.3 percent to 62,870 at 9:26 a.m. in Sao Paulo after advancing 3.5 percent in two sessions, the biggest two-day gain since September. The real retreated 0.2 percent to 2.0493 per dollar. The Standard & Poor’s GSCI index of 24 raw materials slid 0.4 percent and oil fell for the first time in three days in New York.

The bill to undo automatic tax increases and spending cuts that threatened the U.S.’s economic recovery, which was passed by lawmakers late on Jan. 1, won’t reduce the country’s deficit enough to avoid a sovereign-rating downgrade, Moody’s Investors Service said yesterday.

The ratio of U.S. government debt to gross domestic product will probably peak at about 80 percent in 2014 and may stay at about that level for the rest of the decade, New York-based Moody’s said. The ratings company assigns the U.S. its top Aaa ranking and has a negative outlook on the grade. “Further measures that bring about a downward debt trajectory over the medium term are likely to be needed,” Moody’s said.

The Bovespa climbed 7.4 percent in 2012 in its biggest yearly rally since 2009 as stimulus from central banks around the world eased economic concern and borrowing costs at a record low in Brazil boosted equity demand.

Trading volume was 7.3 billion reais ($3.6 billion) in stocks in Sao Paulo yesterday, data compiled by Bloomberg show. That compares with a daily average of 7.3 billion reais this year through Dec. 28, according to data compiled by the exchange.

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