Bovespa Extends Longest Slump in Nine Months as Petrobras Sinks

The Bovespa index declined for a seventh day, extending its longest rout in nine months, as commodities dropped and signs of global economic weakness reduced prospects for Brazil’s exports.

Petroleo Brasileiro SA was the biggest contributor to the gauge’s decline as oil futures dropped. Oil producer OGX Petroleo & Gas Participacoes SA surged in late trading, helping to pare losses on the index. State-run lender Banco do Brasil SA rallied as quarterly profit beat estimates. Gerdau SA rose as the steelmaker said in an earnings conference call that it expects profitability to improve this year.

The Bovespa dropped less than 0.1 percent to 56,154.68 at the close of trading in Sao Paulo, as 49 stocks fell while 18 advanced. The Standard & Poor’s GSCI index of 24 raw materials fell 1.6 percent. Producers of raw materials account for 23 percent of the Bovespa.

“The short-term trend is more negative,” Felipe Rocha, an analyst at brokerage Omar Camargo, said by phone from Curitiba, Brazil. “I don’t see a lot of positives in the short term that could push the Bovespa higher.”

Petrobras, as Petroleo Brasileiro is known, dropped 1.7 percent to 17.32 reais. Oil tumbled to the lowest level this year as euro-area services and manufacturing contracted in February at a faster pace than economists forecast and applications for unemployment benefits in the U.S. rose for the first time in three weeks.

Gerdau advanced 2.8 percent to 16.14 reais. OGX jumped 12 percent to 3.60 reais after earlier falling as much as 3.4 percent, leading an advance in companies controlled by billionaire Eike Batista. LLX Logistica SA gained 3.7 percent to 1.94 reais.

Bank Profit

Banco do Brasil rose 4.1 percent to 25.29 reais. Latin America’s largest lender by assets reported fourth-quarter adjusted profit of 3.18 billion reais, compared with analysts’ average estimate of 2.63 billion reais.

Brazil’s benchmark index may rally 25 percent to reach 70,000 for the first time since April 2011, according to Joaquim Levy, the head of Banco Bradesco SA’s asset management unit.

“Maybe the worst is behind us,” Levy said in an interview at his office in Sao Paulo today, without giving a time frame for his 70,000 forecast. “We could see better growth figures in the fourth quarter, and also in the first quarter. In this scenario, you’d see earnings improving, giving support to the stock market.”

Bovespa Valuation

The real weakened 0.6 percent to 1.9728 per dollar. Finance Minister Guido Mantega said today there is no need to take additional measures to intervene in the currency markets. Brazil’s central bank expects inflation to exceed the mid-point of its target range for a fourth straight year in 2013, Carlos Hamilton, the central bank’s director for economic policy, told reporters in Belo Horizonte today.

The Bovespa has dropped 7.9 percent this year amid concerns inflation will curb growth, which compares with a gain of 5.4 percent for the Standard & Poor’s 500 Index and a 0.3 percent loss in the MSCI Emerging Markets Index. The Brazilian gauge trades at 10.9 times analysts’ earnings estimates for the next four quarters, compared with 10.4 for the MSCI Emerging Markets Index, according to data compiled by Bloomberg.

Trading volume of stocks in Sao Paulo was 8.25 billion reais today, according to data compiled by Bloomberg. That compares with with a daily average of 7.42 billion reais this year through Feb. 19, according to data compiled by the exchange.

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