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Ibovespa Declines on Speculation U.S. Fed Will Curtail Stimulus

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Nov. 8 (Bloomberg) -- The Ibovespa fell for a fourth day as speculation the Federal Reserve will cut U.S. stimulus sooner than expected outweighed slower-than-forecast Brazil inflation.

Mobile carrier Tim Participacoes SA sank the most on the gauge after parent Telecom Italia SpA’s chief executive officer said its Brazilian assets are strategic, damping speculation the local unit will be sold. Eike Batista’s shipbuilder OSX Brasil SA rose for the first time in three days as people familiar with the matter said the company planned to file for bankruptcy protection today.

Brazil’s benchmark equity index dropped 0.9 percent to 52,248.86 at the close of trading in Sao Paulo, extending its weekly decline to 3.3 percent. That’s the third week of losses for the gauge, the longest losing streak since June. Forty-three of its 72 member stocks fell today. The real weakened 0.5 percent to 2.3170 per dollar at 5:30 p.m. local time.

The Ibovespa sank as a report showed U.S. employers added more jobs than forecast in October, stoking speculation that Fed policy makers will dial back monetary stimulus that has boosted demand for emerging-market assets. The U.S. economy grew at a better-than-estimated 2.8 percent annual rate in the third quarter, according to a report released yesterday.

“All attentions are focused” on when the Fed will trim stimulus, Felipe Rocha, an analyst at the brokerage firm Omar Camargo, said in a phone interview from Curitiba, Brazil. “The reduction in liquidity in the world should be negative for Brazil.”

Payrolls in the U.S. increased by 204,000, following a revised 163,000 gain in September that was larger than initially estimated, Labor Department figures showed today in Washington. The median forecast of 91 economists surveyed by Bloomberg called for a 120,000 advance.

Tim, Ambev

Tim slumped 3.9 percent to 10.63 reais, the biggest drop since September.

OSX rose 8.5 percent to 51 centavos. The company plans to follow the oil producer founded by Batista, OGX Petroleo e Gas Participacoes SA, into bankruptcy proceedings and file for protection today, according to two people familiar with the matter who asked not to be identified because the decision hasn’t been made public.

OGX was unchanged at 15 centavos.

Some consumer stocks gained after the Getulio Vargas Foundation said wholesale, construction and consumer prices in Brazil climbed 0.30 percent in the 10 days starting Oct. 21. The median forecast of 12 economists surveyed by Bloomberg was for an increase of 0.59 percent.

Brewer Cia. de Bebidas das Americas climbed 2.1 percent to 86.80 reais. Cosmetics maker Natura Cosmeticos SA rose 0.2 percent to 41.95 reais.

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 24 percent in dollar terms this year, compared with a decline of 5.5 percent for the MSCI Emerging Markets Index of 21 developing nations’ equities.

To contact the reporters on this story: Denyse Godoy in Sao Paulo at dgodoy2@bloomberg.net; Julia Leite in New York at jleite3@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net

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