Brazilian Equities Drop on Global Growth Concern; Itau Declines

Feb. 5 (Bloomberg) -- Brazilian stocks declined after a report showing U.S. companies added fewer workers than forecast in January rekindled concern that slower growth in the global economy will sap demand for equities.

Food processor Marfrig Global Foods SA and beefmaker JBS SA fell the most on the index. Gafisa SA led losses by homebuilders. Vale SA, the world’s largest iron-ore producer, gained after Morgan Stanley recommended buying the shares.

The Ibovespa fell 0.7 percent to 46,624.39 at 5:19 p.m. in Sao Paulo after climbing 1.8 percent yesterday. Fifty-six stocks fell on the index today while 15 rose. The real advanced 0.1 percent to 2.4024 per U.S. dollar. U.S. employers added 175,000 workers in January, ADP Research Institute reported. The median forecast of economists surveyed by Bloomberg was 185,000.

“The jobs data in the U.S. was weak, which makes investors more cautious about equities and is helping to push the Ibovespa lower,” Fausto Gouveia, who helps manage 500 million reais at Legan Administracao de Recursos in Sao Paulo, said in a phone interview. “The outlook for equities is worrisome. The Ibovespa seems to be headed for 45,000.”

Marfrig lost 4.8 percent to 3.80 reais. JBS declined 4.5 percent to 7.80 reais. Gafisa fell 3.4 percent to 2.86 reais. Vale gained 2.5 percent to 33.50 reais.

The Ibovespa has tumbled 18 percent from a bull-market high on Oct. 22 as inflation exceeded policy makers’ target for a third consecutive year and concern mounted that higher government spending will lead to a reduction in the country’s credit rating.

‘Relative Weakness’

“Brazil’s public finances continue to represent a relative weakness for its credit profile,” Fitch Ratings said yesterday in a report.

ALL-America Latina Logistica SA dropped 3.9 percent to 6.20 reais. The railroad company posted fourth-quarter earnings before interest, taxes, depreciation and amortization, or Ebitda, of 349.6 million reais, according to preliminary results released today. That compares with an average estimate of 351 million reais among four analysts surveyed by Bloomberg.

Trading volume of stocks in Sao Paulo today was 6.69 billion reais, compared with a daily average of 6.21 billion reais this year, according to data from the exchange.

To contact the reporter on this story: Ney Hayashi in Sao Paulo at ncruz4@bloomberg.net

To contact the editor responsible for this story: Brendan Walsh at bwalsh8@bloomberg.net