Bovespa Declines as Commodities Tumble on U.S. Industrial Output

The Bovespa index fell for a fourth week as a surprise slowdown in U.S. industrial output pushed commodities lower, dimming the outlook for Brazilian raw-material producers.

OGX Petroleo & Gas Participacoes SA, the oil company controlled by billionaire Eike Batista, contributed most to the benchmark’s decline. Iron-ore producer Vale SA and steelmaker Gerdau SA tumbled as metals declined.

The Bovespa fell 0.3 percent to 57,903.30 at the close of trading in Sao Paulo, extending this week’s decline to 1 percent. The real weakened 0.5 percent to 1.9688 per dollar. The Standard & Poor’s GSCI index of 24 raw materials lost 0.4 percent after a report showed U.S. industrial production unexpectedly shrank in January.

“The external outlook doesn’t look good, with things in the U.S. showing no evidence of a sustained recovery,” Clodoir Vieira, an economist at Sao Paulo-based brokerage Souza Barros Corretora, said in a phone interview. “If the world economy stalls, it becomes more difficult for Brazil to speed up the recovery. I don’t see any good news that could push equities higher in the short run.”

Output at U.S. factories, mines and utilities fell 0.1 percent after a 0.4 percent increase in December, the Federal Reserve said today. The median estimate among economists survey by Bloomberg called for a 0.2 percent rise.

Growth has also been slumping in Brazil, where economists estimate gross domestic product expanded at its slowest pace in three years in 2012.

OGX, Vale

The government is slated to release retail sales figures for December on Feb. 19 while the central bank is scheduled to report foreign investment numbers for January on Feb. 22. The government is also scheduled to release the reading on its main consumer price index through mid-month on Feb. 22. Inflation quickened to a one-year high of 6.15 percent in January, above the 4.5 percent midpoint of the central bank’s target range.

Companies including exchange operator BM&F Bovespa SA, state-run lender Banco do Brasil SA and steelmaker Usinas Siderurgicas de Minas Gerais SA are set to report earnings next week. Eight of the 11 companies listed in the Bovespa index that have reported quarterly results have missed earnings estimates, according to data compiled by Bloomberg.

OGX lost 6.5 percent to 3.46 reais. Vale fell 0.8 percent to 36.47 reais. Gerdau dropped 1.9 percent to 17.21 reais.

The MSCI Brazil/Financials Index climbed 3.3 percent to the highest level since April, as Itau Unibanco Holding SA advanced 4.6 percent to 35.18 reais.

Trading Volume

The Bovespa has dropped 8.5 percent from this year’s high on Jan. 3 amid concern that accelerating inflation may curb Brazil’s economic recovery and that the government’s interventionist policies will hurt profits in industries including utilities and energy.

Brazil’s benchmark equity gauge trades at 10.9 times analysts’ earnings estimates for the next four quarters, compared with 10.4 for MSCI’s measure of 21 developing nations’ equities, data compiled by Bloomberg show.

Trading volume for stocks in Sao Paulo was 7.1 billion reais today, according to data compiled by Bloomberg. That compares with a daily average of 7.54 billion reais this year through Feb. 13, according to data compiled by the exchange.

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