Ibovespa Retreats From 19-Month High as Petrobras Leads Losses

The Ibovespa retreated from the highest level since January 2013, led by Petroleo Brasileiro SA, on speculation the recent rally may have been excessive given the outlook for the economy.

For-profit college operator Estacio Participacoes SA dropped a third day. Shopping-mall owner BR Malls Participacoes SA fell the most in five weeks, the worst performer on the benchmark index. Losses on the gauge were limited as iron-ore producer Vale SA followed commodities higher.

The Ibovespa fell 0.1 percent to 61,837.04 at the close of trading in Sao Paulo, after earlier rising as much as 0.7 percent. The gauge traded at 12.12 times estimated earnings yesterday, the highest valuation in 10 months, according to data compiled by Bloomberg. The real increased 0.3 percent to 2.2374 per dollar at 5:37 p.m. local time.

“People seem to be more optimistic about Brazil, but now it’s a matter of finding out how much of this optimism is already priced in the shares,” Otavio Vieira, a partner at hedge fund Fides Asset Management, said by phone from Rio de Janeiro. “In the short term, we may see some profit taking.”

Brazil’s equity benchmark has climbed 38 percent from this year’s low on March 14, the best performer among major stock benchmarks during the span, on speculation a new government will reduce intervention in the economy, improve fiscal policy and pave the way for growth. Ibope and Datafolha polls on the presidential election may be published today.

GDP Data

A report from the national statistics agency last week showed gross domestic product contracted for a second consecutive quarter in the three months ending in June, slipping into a recession for the first time since 2009.

Petrobras, as Petroleo Brasileiro is known, declined 2.5 percent to 23.95 reais. The stock traded yesterday at 11 times its forecast earnings, the highest ratio since 2009, according to data compiled by Bloomberg.

Estacio dropped 1.6 percent to 28.15 reais. BR Malls retreated 2.9 percent to 22.71 reais.

Vale gained 0.9 percent to 25.73 reais.

Trading volume of equities in Sao Paulo was 10.5 billion reais today, according to data compiled by Bloomberg. That compares with a daily average of 6.65 billion reais this year, according to the exchange.

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