Ibovespa Posts Weekly Drop as GDP Growth Concern Saps Brookfield

The Ibovespa posted a third straight weekly decline after a report showing Brazil’s economic activity contracted in November pushed homebuilders lower.

Brookfield Incorporacoes SA was the worst performer among real-estate companies, and the MSCI Brazil/Consumer Discretionary Index sank to a one-week low. Retailer Lojas Americanas SA fell to the lowest since August. University operator Estacio Participacoes SA slipped after denying a report that it’s merger talks with U.S.-based Laureate Education Inc.

The Ibovespa sank 1 percent to 49,181.86 at the close of trading in Sao Paulo, with 59 of its 72 member stocks falling. The benchmark index fell 1 percent this week. The real gained

0.7 percent to 2.3456 per U.S. dollar at 5:30 p.m. local time, paring its drop over the past three months to 8.2 percent. Brazil’s economic activity index, a proxy for gross domestic product, declined 0.31 percent in November from a month earlier.

“The Ibovespa is still struggling because the economy is very weak,” Alvaro Bandeira, a partner at Orama Asset Management, said in a telephone interview. “There’s nothing really positive on the domestic front that could drive a rebound in the stock market.”

Economists surveyed by Bloomberg had forecast an increase in the economic activity index in November. The central bank lifted the target lending rate this week to 10.5 percent from 10 percent as inflation exceeded the official target.

There are “downside risks” for Brazil’s economic growth as policy makers boost interest rates and the real weakens, Itau Unibanco Holding SA’s chief economist Ilan Goldfajn wrote in a research note to clients commenting on the outlook for Latin America in 2014.

PDG Decline

Brookfield declined 2.8 percent to 1.03 reais. PDG Realty SA Empreendimentos e Participacoes lost 2.7 percent to 1.82 reais. The BM&FBovespa Real Estate Index fell 0.8 percent after earlier today retreating 1.4 percent. Lojas Americanas sank 1.7 percent to 14.88 reais. Estacio declined 1.6 percent to 19.41 reais.

The Ibovespa has tumbled 13 percent from a bull-market high on Oct. 22 as inflation exceeded policy makers’ target for a third consecutive year and concern mounted that higher government spending will lead to a reduction in the country’s credit rating.

Trading volume of stocks in Sao Paulo was 5.14 billion reais today, according to data compiled by Bloomberg. That compares with a daily average of 7.42 billion reais in 2013, according to data available from the exchange.