Most Brazil Stocks Fall as Valuation Climbs to Seven-Month High

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Most Brazilian stocks dropped after a rally that sent the Ibovespa’s valuation to a seven-month high was deemed excessive amid a slowdown of Latin America’s largest economy.

For-profit colleges Estacio Participacoes SA and Kroton Educacional SA were the worst performers on the stock benchmark. Oil producer Petroleo Brasileiro SA rallied amid speculation it will release long-delayed earnings.

The Ibovespa rose 0.1 percent to 54,239.77 at the close of trading in Sao Paulo as 36 stocks declined and 31 advanced. The benchmark index traded at 12.3 times estimated earnings on April 10, the highest valuation since Sept. 3, according to data compiled by Bloomberg. Brazil’s gross domestic product will contract 1.01 percent in 2015, according to a central bank survey of about 100 economists published Monday.

“With the Ibovespa trading around 54,000, the room for further gains is limited,” Luciano Rostagno, the chief strategist at Banco Mizuho do Brasil SA in Sao Paulo, said in a phone interview. “The economic outlook is still weak, with falling levels of confidence by companies and consumers.”

The Ibovespa earlier in the day gained as much as 1.2 percent as a drop in the real boosted exporters. Pulp maker Fibria Celulose SA, which gets about 90 percent of its sales outside Brasil, climbed 1.1 percent to 45.50 reais. Petrobras, as Petroleo Brasileiro is known, gained 3.8 percent to 12.27 reais. Estacio fell 3.7 percent to 19.55 reais, and Kroton lost 4.8 percent to 11.42 reais.

The benchmark equity index entered a bear market Dec. 12 after falling 22 percent from last year’s high in September amid concern that President Dilma Rousseff will struggle to revive growth and curb inflation during her second four-year term.

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