Most Brazil Stocks Fall as Political Concern Offsets Commodities

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Most Brazilian stocks declined on concern that President Dilma Rousseff will struggle to shore up Brazil’s budget after a report that her choice to serve as a liaison to lawmakers declined the job.

State-run lender Banco do Brasil SA was among the biggest contributors to the gauge’s drop. Iron ore producer Vale SA advanced as metal prices increased for a third straight day.

The Ibovespa slipped less than 0.1 percent to 53,729.16 at the close of trading in Sao Paulo with 44 stocks lower and 21 higher. Eliseu Padilha, the minister of civil aviation, declined an offer from Rousseff to serve as her emissary to lawmakers, newspaper Folha de S.Paulo reported on its website.

“Rousseff is facing lots of trouble in forming her team,” said Luiz Roberto Monteiro, a trader at brokerage firm Renascenca DTVM in Sao Paulo. “That’s not good at a moment when the government needs support to approve all the measures that are supposed to put the country back on track again.”

Rousseff said in an interview last week that she would do whatever it takes to reach the government’s budget target. Moody’s Investors Service put Brazil’s investment-grade rating on negative outlook in September, citing concerns about the fiscal outlook for Latin America’s largest economy, six months after Standard & Poor’s cut the nation to the cusp of junk. S&P affirmed Brazil’s rating last month, saying it expects Rousseff to continue implementing measures to shrink the budget deficit.

Banco do Brasil dropped 3.1 percent to 24.68 reais. Insurance company BB Seguridade Participacoes SA retreated 3.4 percent to 34.69 reais.

Commodity Gain

The Ibovespa climbed as much as 0.5 percent earlier today as commodity prices rose. Raw-materials producers account for about one-fourth of the Ibovespa’s weighting.

Vale added 3.3 percent to 16.06 reais as the Bloomberg Base Metals 3-Month Price Commodity Index increased 0.6 percent. State-controlled oil producer Petroleo Brasileiro SA climbed 1.9 percent to 10.89 reais.

The Ibovespa entered a bear market Dec. 12 after falling 22 percent from last year’s high in September. Trading volume of equities in Sao Paulo was 6.5 billion reais Tuesday, according to data compiled by Bloomberg. That compares with a daily average of 6.7 billion reais this year, according to the exchange.

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