The Ibovespa fell for the third time in four sessions as raw-material producers including mining company Vale SA followed a drop in commodities, outweighing a rally by wireless carrier Tim Participacoes SA.
Restoque Comercio e Confeccoes de Roupas SA, the apparel maker that owns the clothing retailer Le Lis Blanc, sank after JPMorgan Chase & Co. cut its recommendation to the equivalent of sell. Pulp producer Fibria Celulose SA fell the most on the MSCI Brazil/Materials Index.
The Ibovespa retreated 0.3 percent to 54,431.05 at the close of trading in Sao Paulo with 41 stocks lower and 31 higher. The gauge is up 15 percent since the end of June, poised for its biggest quarterly advance in four years. The Standard & Poor’s GSCI index of 24 raw materials slipped 0.1 percent, with crude and metals falling, amid concern that a political clash over the U.S. budget might shut down the federal government.
“The U.S. budget talks are something to be watched,” Fernando Goes, an analyst at Sao Paulo-based brokerage Clear Corretora, said in a phone interview. “That could spark some profit taking in the short term, considering that Brazilian equities have gained quite a bit recently.”
The U.S. government’s next fiscal year begins Oct. 1 and some services may be suspended unless Congress agrees on a spending bill by then. The debt ceiling could be reached some time after the middle of next month, according to the Treasury Department.
Vale fell 1.5 percent to 32.27 reais. Fibria lost 3.9 percent to 25.94 reais. State-controlled oil producer Petroleo Brasileiro SA dropped 1.8 percent to 18.77 reais. Restoque slipped 1.5 percent to 6.80 reais.
Tim jumped 9.6 percent to 11.08 reais after Madrid-based Telefonica SA agreed to pay $596 million to boost its stake in the controlling group of parent Telecom Italia SpA.
The real weakened 0.1 percent to 2.2010 per dollar.
MRV Engenharia e Participacoes SA added 2.6 percent to 9.10 reais, and Cyrela Brazil Realty SA Empreendimentos e Participacoes rose 1 percent to 17.06 reais, as some real estate companies gained while traders pared bets for higher borrowing costs. Brazilian swap rates on the contracts due in January 2015 fell 10 basis points, or 0.10 percentage point, to 9.99 percent.
The Ibovespa entered a bull market Sept. 9 after rising 20 percent from this year’s low on July 3 through that day. The gauge is still down 17 percent in dollar terms this year, compared with a decline of 4.3 percent for the MSCI Emerging Markets Index of 21 developing nations’ equities.
Trading volume of stocks in Sao Paulo today was 6.18 billion reais, according to data compiled by Bloomberg. That compares with a daily average of 7.74 billion reais this year through Sept. 20, according to data from the exchange.