Brazil Stocks Decline as China Trade Report Sends Vale Tumbling

  • Iron-ore miner slumps most since 2008 on exports outlook
  • Brazil stock index drops for first time in seven days

The Ibovespa fell for the first time in seven days as a disappointing trade report out of China, Brazil’s top trading partner, sent Vale SA’s shares tumbling.

Vale, a miner of iron ore, contributed the most to the index’s drop after a report showed that China’s imports declined for the 16th straight month and exports slumped by the most in almost six years. Commodities account for about a fifth of the Ibovespa index’s weighting.

Tuesday’s slide puts an end to a rally that had sent the Ibovespa to its highest in five months. Before today, Brazilian stocks had surged 18 percent in a little more than a week as traders bet that President Dilma Rousseff was getting closer to being impeached, which could usher in a change in government that many investors say is the only way to shift attention from a sweeping corruption scandal back to the economy and a budget deficit.

"China continues to be a source of concern for Brazil,” Ignacio Crespo Rey, an economist at brokerage Guide Investimentos, said from Sao Paulo. “Investors are more cautious and paying a lot of attention to the political scenario.”

The Ibovespa fell 0.3 percent to 49,102.14 at the close in Sao Paulo. Vale plunged 12 percent, its biggest tumble since October 2008.

Among Tuesday’s gainers, state-run Banco do Brasil SA rallied amid renewed speculation Rousseff could be ousted following news reports that executives and workers from construction firms accused of corruption are in talks to testify.

Marcelo Odebrecht, the former chief executive officer of Odebrecht SA who was sentenced Tuesday to 19 years in prison for corruption and money laundering, may agree to point his finger at other participants in the scheme in exchange for a reduced sentence, Folha de S. Paulo newspaper said.

"The market has been paying close attention to every development of this investigation," Raphael Figueredo, an analyst at brokerage Clear Corretora, said from Sao Paulo.

Homebuilder MRV Engenharia & Participacoes SA climbed to its highest since March 2013 after quarterly revenue exceeded estimates.

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