Bovespa Declines Fifth Time in Six Days as Vale Slumps on Output

The Bovespa index fell for the fifth time in six days as Vale SA, the world’s third-largest mining company, reported iron-ore production that missed analysts’ estimates.

Vale contributed the most to the stock gauge’s decline. Shopping mall service provider BR Malls Participacoes SA led gains by companies that sell in the domestic market after the central bank raised borrowing costs yesterday less than some analysts had forecast, fueling bets the cycle of monetary tightening in Brazil will be limited.

Brazil’s benchmark equity index retreated 0.5 percent to 52,606.15 at 10:41 a.m. in Sao Paulo after earlier rising as much as 0.7 percent. Vale said in a statement after the market closed yesterday that first-quarter output declined 3.5 percent to 67.5 million metric tons, trailing the 68.3 million-ton average estimate of seven analysts surveyed by Bloomberg.

“Lower iron-ore production suggests weak first quarter of 2013 results,” Marcos Assumpcao and Andre Pinheiro, analysts at the investment bank Itau BBA, wrote in a note to clients dated yesterday.

The real weakened 0.6 percent to 2.0125 per dollar. The Bovespa index plunged 2.1 percent yesterday to the lowest level since July 25 after a drop in commodity prices pushed Brazilian producers lower and the International Monetary Fund cut its forecast for global growth.

Vale slid 1.5 percent to 30.54 reais. BR Malls jumped 3 percent to 23.64 reais.

Brazil’s central bank raised its benchmark interest rate for the first time since July 2011, seeking to slow inflation levels jeopardizing an economic recovery. The bank’s board, led by President Alexandre Tombini, voted 6-to-2 to increase the Selic rate 0.25 percentage point to 7.50 percent from a record low, matching the median forecast of 58 economists surveyed by Bloomberg.

“There was some concern the central bank could be more aggressive,” Lucas Brendler, who helps manage 5 billion reais of assets at Geracao Futuro, said by phone from Porto Alegre, Brazil.