Bovespa Index Falls as Banco do Brasil Drops on Votorantim Stake

The Bovespa index declined for the first time in three days, paring a weekly gain, as Banco do Brasil SA sank after saying it may increase its stake in Banco Votorantim SA.

The lender fell the most in a month after saying in a regulatory filing it may inject capital in Votorantim, which reported five straight quarterly losses through September. Iron-ore producer Vale SA contributed most to the gauge’s decline after Brazil said will pursue the full amount of a $2 billion tax claim. Homebuilder MRV Engenharia & Participacoes SA tumbled after saying 2012 sales trailed projections.

The Bovespa fell 0.4 percent to 61,956.14 at close in Sao Paulo. Thirty-nine stocks retreated on the gauge while 30 rose. The measure is up 0.8 percent this week. The real weakened 0.1 percent to 2.0414 per dollar today.

“From what we’ve seen so far, Banco do Brasil’s investment in Votorantim was a terrible decision,” Rodolfo Amstalden, an analyst at consulting firm Empiricus Research, said by phone from Sao Paulo. “Now it’s saying it may inject even more money there. The market is reacting to that.”

State-controlled Banco do Brasil lost 2.3 percent to 26.20 reais. The lender, which bought a 50 percent interest in Votorantim in January 2009, is studying the possibility of increasing its stake, according to a regulatory filing today.

MRV sank 3.3 percent to 11.12 reais. The Belo Horizonte, Brazil-based homebuilder said in a regulatory filing that it started 666 million reais of new projects in the fourth quarter, down from 1.39 billion reais a year earlier. Sales totaled 3.43 billion reais for all of last year. The company had projected 2012 sales of 4.5 billion reais.

Brazilian Meatpackers

The Bovespa earlier gained as much as 0.3 percent after a report showing China’s economy accelerated for the first time in two years boosted commodities producers.

Meatpackers advanced after Cargill Inc., the largest U.S. beef processor, said it will halt operations in a Texas processing plant.

JBS SA, the world’s biggest beef producer, rose 4 percent to 7.10 reais. Smaller competitor Marfrig Alimentos SA climbed 2.8 percent to 9.91 reais.

The Bovespa entered a bull market on Jan. 3 after rising 21 percent from last year’s low on June 5 as stimulus from central banks around the world eased concern that economic growth might miss expectations while borrowing costs at a record low in Brazil boosted equity demand. The index has since pared its gain to 18 percent.

Brazil’s benchmark equity gauge trades at 11.5 times analysts’ earnings estimates for the next four quarters, compared with 10.9 for MSCI’s measure of 21 developing nations’ equities, data compiled by Bloomberg show.

Trading volume was 6.91 billion reais in stocks in Sao Paulo today, according to data compiled by Bloomberg. That compares with a daily average of 7.25 billion reais in 2012, according to data compiled by the exchange.

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