Ibovespa Extends Weekly Drop as Vale Follows Commodities Lower

The Ibovespa extended a weekly decline as raw-material producers including Vale SA followed commodities lower amid concern that growth will falter in China, Brazil’s top trade partner.

Steelmaker Gerdau SA was the worst performer on the index. The gauge for materials stocks on the MSCI Brazil Index slumped to the lowest level since 2004. Developer BR Properties SA led losses among companies that sell on credit as traders raised bets on higher borrowing costs in Brazil.

The Ibovespa fell 1 percent to 50,094.66 at the close of trading in Sao Paulo, with 41 stocks lower and 23 higher. The index is down 3.6 percent this week, the biggest weekly rout in two months. The Standard & Poor’s GSCI index of 24 raw materials slumped 2.6 percent as metals retreated after a decline in China’s industrial profits.

“The outlook for commodities, especially metals, is challenging, so it’s time to be cautious about companies like Vale,” Luis Gustavo Pereira, an analyst at brokerage firm Guide Investimentos, said by phone from Sao Paulo.

Vale, the world’s largest iron-ore producer, fell 2.7 percent to 15.97 reais. Gerdau sank 9.1 percent to 9.94 reais. Metals declined after government data showed industrial profit in China fell 4.2 percent in January and February.

BR Properties lost 6.2 percent to 13.25 reais.

Swap rates, a gauge of expectations for interest-rate moves, climbed on most contracts after the national statistics agency said Brazil’s gross domestic product unexpectedly expanded in the fourth quarter from the previous three-month period.

The country’s benchmark stock gauge entered a bear market Dec. 12 after falling 22 percent from last year’s high in September. Trading volume of equities in Sao Paulo was 6.8 billion reais ($2.1 billion) Friday, according to data compiled by Bloomberg. That compares with a daily average of 6.67 billion reais this year, according to the exchange.

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