Brazil Stocks Falls Most in Americas as Vale Drops With Metals

  • Commodity producers lead losses on MSCI Brazil Index
  • Government works to pass legislation needed to balance budget

Brazil’s stocks led losses in the Americas as a tumble in commodity companies outweighed speculation the government will be able to get approval for measures intended to trim a budget deficit at Latin America’s largest economy.

Vale SA, the world’s largest iron-ore producer, extended a three-day slide. Pulp producers Fibria Celulose SA and Suzano Papel e Celulose SA, the best performers this year on the Ibovespa, slumped. Education company Estacio Participacoes SA led advances among consumer shares.

The Ibovespa fell 0.8 percent to 47,076.55 at the close of trading in Sao Paulo after gaining as much as 0.6 percent earlier. The gauge traded at 10.8 times estimated earnings, or 19 percent below the the MSCI Emerging Markets Latin America Index. The real erased gains as concern over the outlook for Latin America’s largest economy amid political strife outweighed optimism that Finance Minister Joaquim Levy will stay in his post. The Bloomberg Base Metals 3-Month Price Commodity Index dropped for a fourth day.

"This political turmoil, which makes the economic crisis worse day after day, has to end so we can discuss how to fix the country," Jason Vieira, the chief economist at Infinity Asset Management, said from Sao Paulo. "But there’s still a lot of uncertainty regarding the end of this mess."

Brazilian stocks climbed yesterday after President Dilma Rousseff said over the weekend that her administration agrees with Levy’s proposals to cut spending and raise taxes to stabilize the economy and restore growth. The government is struggling to get Congress approval to the policies as a corruption scandal entangles state-controlled oil producer Petroleo Brasileiro SA, members of Rousseff’s Workers’ Party and lawmakers.

Raw-material companies posted the biggest slide among 10 groups in the MSCI Brazil Index. Consumer companies in the gauge trimmed this year’s plunge as Estacio climbed 4.1 percent.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE