Bovespa Falls as Brazil Output Declines, Fed Concern Saps Vale

The Bovespa index fell the most in six weeks as Brazil’s industrial production dropped and concern the U.S. may reduce stimulus measures drove commodities lower.

Iron-ore producer Vale SA, which has the biggest weighting on the Bovespa, contributed the most to the gauge’s decline. OGX Petroleo & Gas Participacoes SA, the billionaire Eike Batista’s oil company, rose to a two-month high after starting production at a third well.

The Bovespa slid 1.2 percent to 62,523.06 at close of in Sao Paulo, paring this week’s gain to 2.6 percent. The real appreciated 0.6 percent to 2.0325 per dollar. The Standard & Poor’s GSCI index of 24 raw materials fell 0.6 percent after members of the U.S. Federal Open Market Committee said in meeting minutes released yesterday that they will probably end $85 billion monthly bond purchases sometime in 2013.

“The immediate reaction to this news is concern that the U.S. economy could slow down if the stimulus is cut, so raw-materials prices are falling,” Fernando Goes, an analyst at Clear Corretora brokerage in Sao Paulo, said in a phone interview. “But we’ve seen big gains on the Brazilian exchange in the past few days, so some profit taking was already expected.”

Commodities producers account for about 43 percent of the Bovespa’s weighting. The gauge gained 4.8 percent in the previous three sessions and entered a bull market yesterday.

Vale declined 2.2 percent to 41.17 reais. Steelmaker Usinas Siderurgicas de Minas Gerais SA, known as Usiminas, slumped 5.2 percent to 12.54 reais while Cia. Siderurgica Nacional SA lost 4.2 percent to 12.26 reais.

OGX Jumps

OGX said in a regulatory filing today that it started on Dec. 31 output from a well at the Tubarao Azul field in the Campos Basin off the coast of Rio de Janeiro. Shares jumped 2 percent to 5 reais, the highest since Nov. 6 on a closing basis.

“The connection of the third well is a positive in itself, especially if higher flow rates are confirmed,” Paula Kovarsky and Diego Mendes, analysts at the investment bank Itau BBA, wrote in a note to clients published today. “The new well is expected to produce more than the first two.”

Brazil’s industrial output fell 0.6 percent in November from a month earlier, the national statistics agency said today in Rio de Janeiro. Economists had forecast it to decrease 0.9 percent, according to the median forecast of 36 analysts surveyed by Bloomberg.

The Bovespa climbed 7.4 percent in 2012 in its biggest yearly rally since 2009 as stimulus from central banks around the world eased economic concern and borrowing costs at a record low in Brazil boosted equity demand. Trading volume was 9.9 billion reais in stocks in Sao Paulo today, according to data compiled by the exchange.

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