Most Brazilian Stocks Decline Amid Levy Departure Speculation

  • Miner Vale falls to the lowest in more than two months
  • Newspaper report reignites bets that Levy will step down

Most Brazilian stocks declined on speculation that Brazil’s Finance Minister Joaquim Levy will leave his post as the nation struggles to revive its finances and as signs of slowdown in the nation’s top trading partner dimmed the outlook for commodity exporters.

Iron-ore miner Vale SA fell to the lowest since August as rescue work continued at the site of a mining operation it co-owns after two dam failures resulted in deadly mudslides. Power utility Centrais Eletricas Brasileiras SA was the best performer on the Ibovespa benchmark.

Stocks slid after newspaper Valor Economico reported that Finance Minister Joaquim Levy, who has led the government’s efforts to shore up its budget and avoid another credit-rating downgrade, will leave the government by January. Prospects for international trade are also discouraging after a lower-than-expected inflation reading in China followed a tepid trade report, signaling a slump in the world’s second-biggest economy, according to Raphael Figueredo, an analyst at the brokerage Clear Corretora.

"The data from China make investors very concerned regarding global demand for Brazil’s commodity producers," Figueredo said from Sao Paulo. "The rumors regarding Levy’s departure add to the sour mood. There’s too much uncertainty for stocks."

The Ibovespa was little changed at 46,206.57 at the close of trading in Sao Paulo after dropping as much as 1.7 percent. Vale dropped 1.3 percent. Food company BRF SA contributed the most to the index’s decline.

Homebuilder Direcional Engenharia SA and furniture and home appliances retail chain Magazine Luiza SA slumped after posting disappointing results. Members of the Ibovespa that have already reported third-quarter earnings missed analysts’ estimates by a cumulative 14 percent, according to data compiled by Bloomberg.

Retailers B2W Cia Digital and Via Varejo SA were the worst performers on an MSCI gauge of consumer discretionary stocks.

Brazil’s stocks have lost 20 percent since their peak in May as the country heads toward its longest recession since the 1930s. Economists forecast gross domestic product to shrink 3.1 percent this year and 1.9 percent in 2016, according to a weekly survey by the central bank. Standard and Poor’s cut the country to junk in September as the government has struggled to pass austerity measures that include tax increases and costs cuts.

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