April 4 (Bloomberg) -- The Ibovespa fell as Banco Bradesco SA led a slump in financial stocks amid speculation a three-week surge that pushed the benchmark index’s valuation to the highest since January was excessive.
Itau Unibanco Holding SA contributed the most to the gauge’s decline. Commodity producers including Vale SA and Gerdau SA sank. Prumo Logistica SA, the port developer formerly known as LLX, rose to a three-month high.
The Ibovespa dropped 0.6 percent to 51,081.78 at the close of trading in Sao Paulo, trimming this week’s advance to 2.6 percent. The gauge has climbed 14 percent since this year’s low on March 14. The MSCI All-World Index dropped 0.5 percent today. Foreign investors poured 4.23 billion reais into Latin America’s largest equity market in February and March, according to data compiled by Bloomberg. They pulled 854 million reais in January.
“You had a lot of foreign inflows last month, which lifted stocks, and now they’re giving some of that back as global stocks drop,” Hamilton Moreira, an analyst at Banco do Brasil SA’s investment banking unit, said by phone from Sao Paulo.
Forty-six Ibovespa stocks fell today while 25 gained. The gauge’s members traded at an average of 10.12 times 12-month earnings estimates on April 2, the highest ratio since Jan. 3, according to data compiled by Bloomberg.
Voting shares of Bradesco lost 3.2 percent to 33.12 reais. Itau fell 1.4 percent to 34.34 reais. Vale declined 0.2 percent to 29.48 reais. Gerdau dropped 2.6 percent to 13.95 reais.
The real appreciated 1.7 percent to 2.2418 per dollar at 5:23 p.m. local time, the best performance in emerging markets as the central bank extended maturities on swap contracts supporting the currency. The Ibovespa earlier rose as much as 1.7 percent as homebuilders including PDG Realty rallied amid reduced bets for higher borrowing costs in Brazil. Swap rates on contracts maturing in January 2017 dropped nine basis points, or 0.09 percentage point, to 12.36 percent.
“We’ve seen an increase of capital flow to Brazil, which is strengthening the real and could help to keep inflation under control,” Luis Gustavo Pereira, a strategist at brokerage Guide Investimentos, said by phone from Sao Paulo.
Prumo jumped 7.5 percent to 1.14 reais. PDG Realty gained 2.1 percent to 1.48 reais.
Trading volume of stocks in Sao Paulo today was 7.36 billion reais, according to data compiled by Bloomberg. That compares with a daily average of 6.52 billion reais this year, according to data from the exchange.
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