The Ibovespa fell, erasing earlier gains, as Banco do Brasil SA tumbled after a Brazilian court ruled against lenders in a case that determines how much delinquent interest can be charged in class-action lawsuits.
The MSCI Brazil/Financials Index sank 1.9 percent, leading losses among 10 industry groups. Steelmaker Gerdau SA fell as Banco Bradesco SA’s brokerage unit cut its recommendation on the stock to the equivalent of hold. The declines offset a gain in commodity producers including Vale SA.
The benchmark gauge dropped 0.3 percent to 52,203.37 at the close of trading in Sao Paulo, erasing a gain of as much as 1 percent. The ruling by Brazil’s Superior Court of Justice may cost lenders as much as 341.5 billion reais ($154.6 billion) in a separate lawsuit, according to Isaac Ferreira, the central bank’s attorney general.
“This is very negative for the banks and the financial system as a whole,” Joao Pedro Brugger, who helps oversee 520 million reais as a portfolio manager at Leme Investimentos, said in a phone interview from Florianopolis, Brazil. “The provisions they’ll have to do will impact earnings. The shares are going to continue to drop tomorrow.”
Banco do Brasil plunged 7.2 percent to 22.01 reais, the biggest one-day loss since 2009. Itau Unibanco Holding SA fell 2.1 percent to 35.90 reais, while Bradesco tumbled 2.5 percent to 33.02 reais.
Gerdau declined 0.7 percent to 13.66 reais.
The Standard & Poor’s GSCI Index of 24 raw materials added 0.7 percent, bolstering the commodity producers that account for about one-third of the Ibovespa’s weighting.
Vale rose 0.6 percent to 26.18 reais. Iron ore with 62 percent content delivered to the Chinese port of Tianjin advanced 1 percent to $98.50 a dry ton today, data compiled by The Steel Index Ltd. showed. Prices yesterday fell to the lowest since September 2012.
The Ibovespa entered a bull market on May 7, surging 20 percent from this year’s low on March 14, as Petroleo Brasileiro SA rallied on speculation a change in government will reduce intervention in state-run companies.
Trading volume of stocks in Sao Paulo was 6.36 billion reais today, according to data compiled by Bloomberg. That compares with a daily average of 6.74 billion reais this year, according to data from the exchange.