The Bovespa index fell the most in six weeks as Usinas Siderurgicas de Minas Gerais SA led Brazilian raw-material producers lower amid concern that a worsening crisis in Europe will pare demand for commodities.
Brookfield Incorporacoes SA tumbled to a four-year low, leading declines among companies that sell domestically after a report showed industrial production contracted more than expected, adding to concern that Brazil’s recovery will falter. Iron-ore producer Vale SA dropped to the lowest since July 2009. Oil company Petroleo Brasileiro SA slumped for a fifth day.
The Bovespa dropped 1.8 percent to 54,889.10 at the close of trading in Sao Paulo, the biggest one-day slump since Feb. 20. Fifty-eight stocks retreated on the gauge while 10 advanced. The Bloomberg Base Metals 3-Month Price Commodity Index lost 1 percent as Cypriot government officials met with the European Union and the International Monetary Fund today to seek seek easier bailout terms. The real appreciated 0.1 percent to 2.0194 per dollar.
“The problems in Cyprus are not over yet,” Gustavo Mendonca, an economist at Oren Investimentos, said by phone from Rio de Janeiro. “There’s still concern that the problems over there may spread to other countries. We still don’t know what will happen to banks in the region if things get worse.”
Cyprus’s government is seeking more time to reach targets required in return for 10 billion euros ($12.8 billion) in international funds after agreeing to impose losses on uninsured depositors at the country’s two biggest banks. The country’s Finance Minister Michael Sarris resigned today as a government committee was set up to investigate the nation’s economic crisis.
Usiminas, as Usinas Siderurgicas is also known, dropped 4.1 percent to 10.92 reais. Vale fell 1.8 percent to 31.84 reais, while Petrobras stumbled 1.9 percent to 17.70 reais. Brookfield declined 9 percent to 2.22 reais.
“The industrial production data came in below estimates, and show the country is having difficulties,” Paulo Hegg, an analyst at Sao Paulo-based investment adviser Blue Star Private, said by phone.
Brazil’s industrial production contracted 2.5 percent in February, the most since December 2008. Economists had forecast output would fall 2 percent from the previous month, according to the median estimate from 30 analysts surveyed by Bloomberg.
The country’s main stock gauge gained as much as 0.6 percent earlier today as homebuilder Rossi Residencial SA rallied after saying it will turn away from government-sponsored projects aimed at low-income families in favor of higher-end projects in its 2013-2015 business plan.
The Bovespa has retreated 13 percent from this year’s high on Jan. 3 amid concern accelerating inflation may curb Brazil’s economic recovery and the government’s interventionist policies will hurt profits in industries including utilities and energy. The MSCI BRIC Index of shares in Brazil, Russia, India and China has lost 7.3 percent over the same period.
Brazil’s benchmark equity gauge trades at 10.9 times analysts’ earnings estimates for the next four quarters, compared with 10.6 for the MSCI Emerging Markets Index of 21 developing nations’ equities, data compiled by Bloomberg show.
Trading volume for stocks in Sao Paulo was 6.59 billion reais today, according to data compiled by Bloomberg. That compares with a daily average of 7.52 billion reais this year through March 28, according to data compiled by the exchange.