Most Brazilian Stocks Decline as Gafisa Tumbles on Inflation

Most Brazilian stocks dropped as homebuilder Gafisa SA and other companies that sell domestically retreated on concern that policy makers will continue to increase borrowing costs amid accelerating inflation.

Drugstore chain Raia Drogasil SA was the worst performer on the MSCI Brazil/Consumer Staples Index, which sank to a two-week low. Losses on the Ibovespa were limited as Petroleo Brasileiro SA rose after Credit Suisse Group AG raised the state-controlled oil producer to the equivalent of hold.

Brazil’s benchmark equity gauge was little changed at 45,691.21 at 1:18 p.m. in Sao Paulo, with 44 stocks lower and 29 higher. The real dropped 0.2 percent to 2.3654 per dollar. The IPCA consumer price index climbed 0.69 percent in February after rising 0.55 percent in the prior month, according to national statistics bureau data. The median estimate among 49 economists surveyed by Bloomberg was for an increase of 0.65 percent.

“The mood isn’t good, but Petrobras is holding the index at this level,” Ari Santos, an equity trading manager at H. Commcor, said by phone from Sao Paulo. “The inflation data came in higher than expected, and that exerts some pressure. It creates an uncertainty about the economy, and that boosts risk aversion.”

Gafisa declined 2.5 percent to 3.07 reais. Raia Drogasil slipped 2.3 percent to 16.41 reais. Petrobras, as Petroleo Brasileiro is known, climbed 1.5 percent to 13.30 reais.

The Ibovespa has tumbled 19 percent from a bull-market high on Oct. 22 as inflation exceeded policy makers’ target 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 yesterday was 5.7 billion reais, compared with a daily average of 6.34 billion reais this year, according to data from the exchange.

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