Bovespa Declines as Petrobras Plunge Outweighs Itau Stock Rally

The Bovespa index fell for a second day as oil producer Petroleo Brasileiro SA slumped on weaker-than-expected earnings, outweighing gains by financial stocks led by Itau Unibanco Holding SA.

Voting shares of Petrobras, as state-controlled Petroleo Brasileiro is also known, fell the most on the gauge. Itau, Latin America’s largest lender by market value, jumped the most in a month after reporting lower bad loan provisions.

The Bovespa fell 0.2 percent to 59,444.97 at the close of trading in Sao Paulo. Twenty-four stocks dropped on the measure while 44 climbed. The real strengthened 0.5 percent to 1.9846 per dollar.

Voting shares of Petrobras tumbled 8.3 percent to 16.60 reais, plunged to the lowest since August 2005. The oil producer said it will pare back dividends as earnings before interest, taxes, depreciation and amortization dropped to 11.9 billion reais in the fourth quarter, compared with an average estimate of 14.6 billion reais among analysts surveyed by Bloomberg.

Itau rallied 2.5 percent to 34.19 reais after saying in a regulatory filing today that provisions were 5.69 billion reais in the fourth quarter, down from 5.94 billion reais in the three previous months. The bank reported recurring profit of 3.5 billion reais, matching analysts’ estimates.

“Last year there was some concern that a slowing economy would lead to higher delinquency rates, but banks have reported strong numbers, signaling the industry is doing well,” Fernando Goes, an analyst at brokerage Clear Corretora in Sao Paulo, said in a phone interview.

Bull Market

OGX Petroleo & Gas Participacoes SA, the oil company controlled by Brazilian billionaire Eike Batista, fell 6.2 percent to 3.77 reais in its second day of declines. Volume was 1.5 times the three-month average, data compiled by Bloomberg show.

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 advance to 13 percent.

Brazil’s benchmark equity gauge trades at 11 times analysts’ earnings estimates for the next four quarters, compared with 10.3 for MSCI’s measure of 21 developing nations’ equities, data compiled by Bloomberg show.

Trading volume for stocks in Sao Paulo was 8.85 billion reais today, according to data compiled by Bloomberg. That compares with a daily average of 7.34 billion reais this year through Feb. 5, according to data compiled by the exchange.

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