Ibovespa Declines for Second Day as PDG Leads Homebuilders Lower

The Ibovespa dropped for a second straight day as PDG Realty SA led losses among homebuilders after a report showed Brazil’s inflation exceeded the ceiling of the official target.

Banco Bradesco SA was the biggest contributor to the gauge’s decline, while Banco Santander Brasil slumped the most since April. Travel agency CVC Brasil Operadora e Agencia de Viagens SA dropped to the lowest since February after saying bookings fell 15 percent in June from a year earlier.

The Ibovespa retreated 0.3 percent to 53,634.69 at the close of trading in Sao Paulo, with 46 stocks falling and 20 rising. The session ended early because of the World Cup game between Brazil and Germany at 5 p.m. local time.

“There’s nothing positive about the Brazilian economy that will boost the Ibovespa in the short term,” Clodoir Vieira, a partner at consulting firm Compliance Comunicacao Empresarial in Sao Paulo, said in a telephone interview. “Inflation is still a risk, and there’s no sign that it will come closer to the center of the government’s target any time soon.”

Consumer prices increased 6.52 percent in the 12 months through June, the national statistics agency said today, exceeding the 6.50 percent upper limit of the official target range. Economists surveyed by Bloomberg had predicted annual inflation of 6.51 percent.

PDG Realty declined 2.7 percent to 1.43 reais as the BM&FBovespa Real Estate Index slipped 0.4 percent. Santander lost 3.1 percent to 14.81 reais. Bradesco lost 1.1 percent to 32.05 reais. CVC fell 2.6 percent to 12.95 reais. The real rose 0.5 percent to 2.2132 per dollar as of 2:58 p.m. local time.

Bull Market

The Ibovespa gained 0.2 percent earlier today as higher metal prices boosted commodity producers. The Bloomberg Base Metals 3-Month Price Commodity Index increased 0.5 percent as Morgan Stanley said industrial metals will probably benefit from China’s stimulus.

Brazil’s benchmark equity index entered a bull market on May 7, surging 20 percent from this year’s low, as Petroleo Brasileiro SA rallied on speculation a change in government will reduce intervention in state-run companies.

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