Ibovespa Extends Monthly Slump on Economic Data as Vale Tumbles

The Ibovespa extended its monthly slide as a decline in Brazil’s industrial confidence and a budget deficit added to concern Latin America’s largest economy will weaken further.

Vale SA, the world’s largest iron-ore producer, led losses in the gauge as the raw material capped its biggest quarterly slump since at least 2009. Airline Gol Linhas Aereas Inteligentes SA fell to the lowest since August 2013 after reporting a wider-than-expected loss. Water utility Cia. de Saneamento Basico do Estado de Sao Paulo rallied after being authorized to boost rates by 14 percent.

The Ibovespa lost 0.2 percent to 51,150.16 at the close of trading in Sao Paulo, bringing its monthly drop to 0.8 percent. Brazil’s industrial confidence slumped for a second month, while February’s primary budget, which excludes interest payments, surprised analysts.

“The market is already expecting a lackluster year, with industry and retail sales unlikely to grow,” Ari Santos, an equity trading manager at H. Commcor, said by telephone from Sao Paulo. “The fiscal data also adds concern.”

Today’s decline in the Ibovespa trimmed its first-quarter advance to 2.3 percent.

Vale tumbled 3.7 percent to 15.45 reais. The raw material slumped 2.5 percent, according to daily data from Metal Bulletin Ltd. Gol lost 4.8 percent to 7.82 reais. Sabesp climbed 5.9 percent to 17.71 reais.

Levy Remarks

The gauge rose as much as 0.4 percent earlier as Finance Minister Joaquim Levy said the government will cut spending as much as needed to meet fiscal targets and avoid losing investment-grade status.

“The government is putting more emphasis on the fiscal adjustment, and that’s something investors see as necessary,” Rafael Ohmachi, an analyst at brokerage firm SLW Corretora, said in a phone interview from Sao Paulo.

Standard & Poor’s this month affirmed Brazil’s sovereign rating at BBB-, the lowest investment grade, with a stable outlook. S&P said it expects President Dilma Rousseff to continue implementing fiscal measures to shrink a budget deficit, including states and municipalities, that widened to 6.7 percent of GDP in 2014.

Brazil economists have slashed growth estimates for 13 straight weeks, and now expect gross domestic product to contract 1 percent this year, according to a central bank survey of about 100 analysts published Monday.

The Ibovespa 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 7 billion reais Tuesday, 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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