Bloomberg News

Brazilian Stocks Snap Five-Day Gain as Vale Follows Metals Down

February 07, 2012

Feb. 7 (Bloomberg) -- Brazil’s Bovespa index fell for the first time in six days as mining company Vale SA followed metals lower amid renewed concern that Greece’s struggle to secure a second bailout will hurt global growth.

Vale contributed the most to the gauge’s drop, while Bradespar SA, which is part of the group that controls Vale, fell the most in one week. Card-payment processor Redecard SA surged after Itau Unibanco Holding SA offered to buy all outstanding shares in its unit.

The Bovespa fell 0.1 percent to 65,144.56 at 1:27 p.m. in Sao Paulo. Thirty-seven stocks sank on the index, while 33 climbed. The real strengthened 0.2 percent to 1.7225 per U.S. dollar. The Bloomberg Base Metals 3-Month Price Commodity Index slid 0.4 percent.

Greek Prime Minister Lucas Papademos is convening the nation’s political leaders to seek consensus on the cuts required for another European Union-led bailout. Officials are working on the final draft of the document listing the budget and structural measures required to receive international funding, a government official said.

“The more the days go by with no solution for Greece, the more cautious investors become,” Joao Pedro Brugger, who helps manage 80 million reais ($46.5 million) at Leme Investimentos, said by phone from Florianopolis, Brazil. “Stocks linked to commodities suffer the most when the external outlook seems more uncertain, but to some extent higher risk aversion ends up affecting all stocks.”

Vale fell 1.1 percent to 43.43 reais. Bradespar dropped 1.4 percent to 35.59 reais.

Redecard Advances

Redecard jumped 8.9 percent to 34.90 reais. Itau plans to buy 336.4 million common shares of the card-payment processor for as much as 35 reais each, according to a regulatory filing.

Itau dropped 1.5 percent to 35.51 reais. Latin America’s biggest bank by market value also reported fourth-quarter adjusted net income of 3.75 billion reais, a 10 percent increase from a year earlier, according to a regulatory filing. That matched the mean estimate for adjusted earnings of 3.75 billion reais in a Bloomberg survey of eight analysts.

The Bovespa has advanced 15 percent this year, after slumping 18 percent in 2011, buoyed by Brazil’s interest-rate cuts, signs of growth in the U.S. and renewed optimism Europe may be closer to solving its debt crisis. The gauge trades at 10.4 times analysts’ earnings estimates, in line with the ratio for MSCI Inc.’s measure of 21 developing nations’ equities, weekly data compiled by Bloomberg show.

Traders moved 5.14 billion reais in stocks in Sao Paulo yesterday, data compiled by Bloomberg show. That compares with a daily average of 6.53 billion reais this year through Feb. 3, according to data from the exchange.

--Editors: Brendan Walsh, Richard Richtmyer

To contact the reporter on this story: Ney Hayashi in Sao Paulo at ncruz4@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos in New York at papadopoulos@bloomberg.net


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