Brazilian Stocks Decline as Inflation Outweighs Steelmaker Rally

  • Renner falls as quarterly earnings trailed analysts' estimates
  • Gerdau, CSN extend gains on speculation China to cut output

Brazil’s benchmark stock index fell for the first time in three days, trimming a weekly gain, as concern that inflation is eroding many of the gains the middle class made during the boom years of the past decade offset a rally in steelmakers.

Credit-card processor Cielo SA contributed most to the gauge’s decline after an inflation report showed consumer price increases unexpectedly quickened to the fastest in 12 years. Retailer Lojas Renner SA fell the most since October after earnings trailed analysts’ estimates. Steelmakers Gerdau SA, Metalurgica Gerdau SA and Cia. Siderurgica Nacional advanced on prospects China will cut its output, reducing a global gut.

The Ibovespa had advanced 5.8 percent in the past two days, the biggest gain for such a period of time since August, as commodities advanced. Concern that corporate profits will be hurt by inflation as Brazil heads toward its worst recession in more than a century sent companies that depend on domestic demand lower Friday. Retailer Lojas Americanas SA fell to a three-month low.

“The gains in the past days were a little exaggerated, because prospects for the local economy didn’t change,” Ari Santos, a trader at the brokerage H. Commcor, said from Sao Paulo.

The Ibovespa fell 0.6 percent to 40,592.09. The index traded at 10.1 times estimated earnings, the highest level in a month. Cielo dropped 6 percent, Renner lost 5.6 percent and Lojas Americas retreated 3 percent. Gerdau rose 1.7 percent, while its controlling shareholder Metalurgica Gerdau added 7.7 percent, and CSN, as Cia. Siderurgica is known, climbed 5.3 percent.

“Steelmakers are recovering all over the world today as the news from China brings some relief to the sector,” said Vitor Suzaki, an analyst at the brokerage Lerosa Investimentos in Sao Paulo, adding that he’s seeing more demand from foreign investors.

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