Soured Loans Sink Banco do Brasil as Ibovespa’s Advance Capped

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Latin America’s largest bank by assets tumbled the most in a month after setting aside more money to cover soured loans, capping bigger gains in the Ibovespa.

Banco do Brasil SA extended a three-day slide to 7.5 percent after saying its provisions jumped 43 percent in the first quarter. JBS SA, the world’s largest meat producer, erased a rally that sent its stock to the highest level since it began trading in 2007 amid record earnings.

The Ibovespa added 0.5 percent to 56,656.57 at the close in Sao Paulo, after climbing 1 percent earlier Thursday. Gains in the index were also limited as data showed retail sales fell more than analysts predicted as shoppers reduced purchases in supermarkets. While earnings for the gauge’s companies beat estimates by 5.1 percent in the first quarter, they declined by 74 percent, according to data compiled by Bloomberg.

“We need more positive news for stocks to climb further,” Otavio Vieira, who helps oversee 250 million reais ($83.2 million) as a partner at Fides Asset Management, said by phone from Rio de Janeiro. “The economy is still doing very poorly.”

Brazilian shares rose even as the lower house approved an amendment that raises benefits for pensioners. That was the first major setback in Congress for Finance Minister Joaquim Levy, who is banking on legislation that would raise taxes and cut spending.

Bull Market

The proposal helped send the Ibovespa into a bull market last month, with gains led by Petroleo Brasileiro SA, which reported long-delayed results amid a corruption probe. Since rising to the highest valuation level in five years on May 5, the stock measure has dropped 2.4 percent on signs the nation is struggling to navigate an economic slowdown.

Lenders Banco Bradesco SA and Itau Unibanco Holding SA climbed at least 1 percent to lead gains in the Ibovespa. Banco do Brasil lost 3.9 percent to 25.96 reais.

JBS was unchanged at 16.60 reais after rallying as much as 3.8 percent earlier Thursday.

Trading volume of equities in Sao Paulo was 6.88 billion reais, according to data compiled by Bloomberg. That compares with a daily average of 6.98 billion reais this year, according to the exchange.

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