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Bovespa Falls as Santander Brasil Drops on S&P’s Greek Warning

March 29, 2012

The Bovespa index dropped to a seven-week low as Brazilian banks tumbled on concern the global financial system may be hurt by a worsening credit crisis in Europe after Standard & Poor’s said Greece may have to restructure its debt again.

Banco do Brasil SA, Latin America’s biggest lender by assets, dropped the most in a week. State-controlled oil company Petroleo Brasileiro SA (PETR4) slipped to the lowest in six weeks after average production fell 1.1 percent in February from the previous month and as crude prices sank.

The Bovespa declined 0.3 percent to 64,871.99 at the close of trading in Sao Paulo, paring this quarter’s advance to 14 percent. Forty-two stocks fell while 28 advanced. The real gained 0.2 percent to 1.8214 per U.S. dollar.

“Not only is Greece still not done with its problems, but other countries in the region, such as Spain and Portugal, still face some challenges,” Felipe Casotti, who helps manage 1.2 billion reais ($654 million) at Maxima Asset Management, said by phone from Rio de Janeiro. “In the U.S., where things seemed to be better, it looks like the recovery may be stalling. And if the world grows at a slower pace, so will Brazil.”

Moritz Kraemer, head of sovereign ratings at S&P, said at an event in London late yesterday that Greece will probably have to restructure its debt again and this may involve bailout partners such as the International Monetary Fund.

Brazilian Banks Drop

Banco do Brasil fell 2.1 percent to 26.36 reais. Banco Santander Brasil (SANB11), the Brazilian unit of Spain’s biggest bank, slid 1 percent to 17.02 reais. Itau Unibanco Holding SA (ITUB4), Latin America’s biggest lender by market value, lost 1 percent to 35.63 reais.

Some consumer stocks gained as President Dilma Rousseff told reporters today in New Delhi the government will announce measures next week to boost growth in Latin America’s biggest economy. The central bank also said today that the annual inflation rate will fall below its 4.5 percent target this year.

Cia. de Bebidas das Americas, Latin America’s largest brewer, climbed 0.7 percent to 76.16 reais.

SLC Agricola SA (SLCE3) gained 3.1 percent to 18.79 reais after Banco Itau BBA SA raised its recommendation on the agriculture company to outperform, which means the stock is expected to perform better than market average.

Petrobras, as Petroleo Brasileiro is known, fell 0.3 percent to 23.32 reais. Crude oil for May delivery tumbled to a six-week low on the New York Mercantile Exchange.

Quarterly Gain

Brazil’s benchmark equity index is headed for its biggest quarterly gain since the period ended September 2010. Stocks have been buoyed by interest-rate cuts in Latin America’s largest economy, signs of growth in the U.S. and speculation Europe may be closer to solving its debt crisis.

The Bovespa trades at 10.8 times analysts’ earnings estimates, which compares with a 10.6 ratio for MSCI Inc.’s measure of 21 developing nations’ equities, weekly data compiled by Bloomberg show.

Traders moved 7.06 billion reais in stocks in Sao Paulo today, data compiled by Bloomberg show. That compares with a daily average of 7.19 billion reais this year through March 16, according to data from the exchange.

To contact the reporter on this story: Ney Hayashi in Sao Paulo at

To contact the editor responsible for this story: David Papadopoulos in New York at

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