Brazil Stocks Trim Biggest Monthly Gain Since 2002 as Vale Sinks

  • Currency's advance sends shares of exporters tumbling
  • Lenders Itau and Bradesco contribute most to Ibovespa's slump

Brazilian stocks trimmed their biggest monthly advance since 2002 as exporters from Vale SA to Suzano Papel e Celulose SA tumbled amid a currency rally.

The Ibovespa led losses among the biggest equity markets as Brazil’s real extended its best month in 13 years, dimming prospects for companies’ overseas revenue. Stocks also fell after policy makers said they see no room for cutting borrowing costs even as Latin America’s largest economy faces its worst recession in a century. The real gained after the central bank sold one-sixth of the contracts auctioned to protect against a decline, indicating traders are betting it will appreciate.

“The appreciation of the currency is very negative for exporters, which have already been suffering with weak commodity prices,” said Rafael Ohmachi, an analyst at brokerage Guide Investimentos in Sao Paulo.

The Ibovespa has surged the most in the world this year on speculation that President Dilma Rousseff will be ousted amid a corruption scandal and a new government will ease the political paralysis that has contributed to an economic malaise. The stock benchmark rally sent its valuation earlier this month to the highest level since May, with technical indicators showing the market was poised for a decline.

The benchmark equity gauge dropped 2.3 percent to 50,055.27 at the close of trading in Sao Paulo, paring its monthly gain to 17 percent. Vale, the world’s largest iron-ore miner, and pulp producer Suzano, which gets most of its revenue from abroad, each dropped 2.8 percent. Commodity producers account for about 20 percent of Ibovespa’s weighting.

In addition to raw-material exporters, banks also slumped. Lenders Itau Unibanco Holding SA and Banco Bradesco retreated more than 2.8 percent.

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