The Ibovespa declined after a three-week rally that sent valuations to an 18-month high was deemed excessive amid a slowdown in Latin America’s largest economy.
State-run oil producer Petroleo Brasileiro SA retreated after the best five-day advance since 2008. Planemaker Embraer SA dropped after saying its backlog fell to $20.4 billion on March 31.
The Ibovespa fell 0.4 percent to 54,674.21 at the close of trading in Sao Paulo as 34 of its 68 stocks dropped. The gauge traded at 12.8 times estimated earnings on Wednesday, the highest ratio since October 2013. Oil fell for the first time in six days in New York as Saudi Arabia increased output.
“We haven’t seen positive news when it comes to the economy, so the outlook going forward is not very bright,” Ignacio Crespo, an economist at Guide Investimentos SA brokerage, said by phone from Sao Paulo. “We’re seeing a correction today.”
Brazil’s gross domestic product will contract 1 percent in 2015, with inflation exceeding the upper limit of the government’s target, according to a central bank survey of about 100 economists published on Monday.
Petrobras, as Petroleo Brasileiro is known, declined 3 percent to 12.93 reais. Embraer lost 3 percent to 23.32 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. The gauge has since advanced 14 percent.
Trading volume of equities in Sao Paulo was 7.6 billion reais ($2.5 billion) on Thursday, according to data compiled by Bloomberg. That compares with a daily average of 6.78 billion reais this year, according to the exchange.