Ibovespa Erases Advance as Investors Weigh Political Outlook

The Ibovespa fell, reversing earlier gains, as investors awaited a debate among presidential candidates after a poll showed Marina Silva will probably beat President Dilma Rousseff in a runoff vote.

Tobacco company Souza Cruz SA fell the most on the gauge. Petroleo Brasileiro SA, the state-run oil company known as Petrobras, climbed to the highest since March 2012. Power utility Centrais Eletricas Brasileiras SA was the best performer on the index.

The Ibovespa dropped 0.2 percent to 61,141.27 at the close of trading in Sao Paulo, erasing a gain of as much as 1.6 percent. Brazil’s benchmark equity index has surged 36 percent from this year’s low on March 14 on bets a new government will pare intervention in the economy and improve fiscal policy, paving the way for growth.

“Investors got excited again on the political outlook, but they want to see what happens in the debate, to see how Marina does,” Pedro Galdi, the chief analyst at brokerage firm SLW Corretora, said by phone. “This is a complicated week, we have several polls coming out.”

Silva would have 50 percent of voter support in an October second-round vote against Rousseff, who would have 40 percent backing, according to a poll published Aug. 29. Her rise has forced her rivals to step up criticism of Silva’s proposals, with Rousseff criticizing the former environment minister’s proposal to reduce oil dependence. Senator Aecio Neves, who trails third in polls, mocked Silva’s change in posture on economic policy, saying her proposals were contradictory.

Rousseff, Silva and Neves will face each other in the second televised debate today at 5:45 p.m. local time. Researchers Ibope, Datafolha and Sensus have said they’re doing voting polls this week.

30 Reais

Petrobras advanced 2.1 percent to 23.83 reais, extending this year’s rally to 40 percent. Shares may rise to 30 reais if Silva wins the election, Banco BTG Pactual SA’s analysts including Carlos Sequeira wrote in a research note to clients.

Voting shares of Eletrobras, as Centrais Eletricas is known, added 5.5 percent to 8.60 reais. Souza Cruz dropped 4.7 percent to 19.98 reais.

Trading volume of equities in Sao Paulo was 7.1 billion reais today, according to data compiled by Bloomberg. That compares with a daily average of 6.66 billion reais this year, according to the exchange.

Before it's here, it's on the Bloomberg Terminal.