Ibovespa Declines Most in World as Fibria Leads Exporters Lower

The Ibovespa fell the most among the world’s major equity benchmarks as pulp maker Fibria Celulose SA led exporters lower on speculation that recent gains were excessive given the outlook for Brazil’s currency.

Iron-ore producer Vale SA dropped the most in a week. Meatpacker JBS SA sank, following its biggest two-day gain in a month. Localiza Rent a Car SA, Latin America’s largest car-rental company, extended its rally to the longest since February 2012 as some companies that depend on domestic sales rose on waning concern that inflation will hinder economic growth.

The Ibovespa fell 1.1 percent to 55,095.69 at the close of trading in Sao Paulo. The gauge rose 2.6 percent yesterday, the most among 94 equity indexes tracked by Bloomberg globally, after the Fed said it needs more evidence of improvement in the U.S. economy before starting to reduce the $85 billion pace of monthly bond purchases that have boosted emerging-market assets. The real fell 0.7 percent to 2.2013 per dollar at 5:30 p.m. local time, paring its 30-day gain to 9.6 percent.

“There’s some profit-taking today after such big gains yesterday,” Alvaro Bandeira, a partner at Orama Asset Management, said in a phone interview from Rio de Janeiro. “Given this stance from the Fed, we probably won’t see the real falling below 2.25, and there may be some short-term correction in stocks that have outperformed recently.”

A stronger real can hurt exporters because it reduces the local-currency receipts from their overseas sales.

Rate Outlook

Fibria, which gets about 90 percent of its revenue outside Brazil, fell 3.7 percent to 27.15 reais. Vale dropped 1.2 percent to 32.60 reais. JBS slid 2.6 percent to 7.60 reais. Forty-eight stocks retreated on the Ibovespa today while 23 rose.

Some consumer stocks gained as speculation that the real will rally further after its one-month advance eased concern that inflation will squelch Brazil’s economic pickup. Policy makers have increased the benchmark lending rate by a total of 1.75 percentage points this year to 9 percent, the highest in Latin America, in an attempt to rein in inflation.

“A stronger currency could temper expectations of further tightening later in the year and in 2014,” economists at Capital Economics Ltd. including Neil Shearing wrote in a research note to clients today.

Localiza climbed 0.6 percent to 33.75 reais. Cia. de Bebidas das Americas, the Brazilian unit of Anheuser-Busch InBev NV, jumped 1.3 percent to 86.95 reais.

Brazilian swap rates on the January 2015 contract, a gauge of expectations for future changes in borrowing costs, have fallen 54 basis points, or 0.54 percentage point, to 10.12 percent from this year’s high Aug. 19.

Oi’s Dividend

Phone company Oi SA added 4.1 percent to 4.79 reais after its board approved a payment of 500 million reais in dividends.

The Ibovespa entered a bull market Sept. 9 after rising 20 percent from this year’s low on July 3 through that day. The gauge is still down 16 percent in dollar terms this year, compared with a decline of 2.8 percent for the MSCI Emerging Markets Index of 21 developing nations’ equities.

The trading volume of stocks in Sao Paulo was 7.76 billion reais today, according to data compiled by Bloomberg. That compares with a daily average of 7.74 billion reais this year through Sept. 17, according to data compiled by the exchange.

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