Brazil Stocks Join Emerging Market Rout as Petrobras, Vale Fall

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  • Steelmaker Usiminas dropped to lowest price in two weeks
  • Commodity producers are among worst performers on Ibovespa

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The Ibovespa fell, joining a rout in emerging markets, as state-controlled oil producer Petroleo Brasileiro SA followed a slump in crude and a drop in metals sent miner Vale SA lower.

All three of Brazil’s largest steelmakers were among the biggest losers on the benchmark equity index, led by Gerdau SA. Commodity producers account for 23 percent of the Ibovespa’s weighting, according to data compiled by Bloomberg.

As Latin America’s biggest economy struggles to recover from its worst recession in a century, weak exports of raw materials are seen as another risk for growth. Investors have also been looking for indications of whether a political crisis fueled by a corruption scandal will delay measures aimed at restoring confidence.

"The commodity sector is very important for Brazil and it can make a difference in a moment when the uncertainties regarding the domestic rebound are high," said Pedro Galdi, a partner at the equity research firm Upside Investor in Sao Paulo. "The outlook for local stocks has become cloudier."

With 48 of its 58 stocks dropping, the Ibovespa fell 1.4 percent to 57,079.76 at the close of trading in Sao Paulo and extended its second straight weekly decline. Petrobras, as Petroleo Brasileiro is known, lost 2.6 percent, and Vale dropped 1.4 percent. Gerdau lost 3.7 percent. Lenders Itau Unibanco Holding SA and Banco Bradesco SA were among the biggest contributors to the gauge’s drop.

Stocks fell globally Friday as investors awaited next week’s Federal Reserve meeting, with economic indicators pointing to uneven growth in the U.S. The chances of a September rate increase in the world’s largest economy have fallen to 20 percent from 30 percent a week ago, with December the first month with more than even odds of a hike.

— With assistance by Ney Hayashi Cruz

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