Brazil Stocks Fall, Led by Commodities, on Growth Concerns

By Paulo Winterstein

Sept. 5 (Bloomberg) -- Brazilian stocks fell for a sixth day, capping its longest streak of losses in a year, as rising concerns about global growth sent energy and materials companies lower.

Petroleo Brasileiro SA and Cia. Vale do Rio Doce, the commodities producers that have the most weight in the index, both fell as oil and metals prices declined. Cia. Energetica de Sao Paulo, the utility controlled by the state of Sao Paulo, dropped on reports the federal government may not renew some energy licenses.

The Bovespa index, about half of which is commodities stocks, lost 726.59, or 1.4 percent, to 50,681.95 at 9:13 a.m. New York time. The MidLarge Cap index fell 1.2 percent, while the Small Cap index slid 1.5 percent. The MSCI Latin America index slumped 2.5 percent.

Petrobras, as the state-controlled oil company is known, fell 1 percent to 31.15 reais. Crude oil fell as the dollar's gain curbed demand for commodities as a currency hedge.

Vale, the world's biggest iron-ore producer, dropped 1.2 percent to 35.10 reais. Metals fell in London, with copper dropping as stockpiles rose the most in more than three years.

The U.S. lost more jobs than forecast in August and the unemployment rate climbed to a five-year high, a government report today showed, heightening the risk that the economic slowdown will worsen.

The U.S. economy is ``stagnant,'' Europe is falling into a recession, and central banks won't have much room to cut borrowing costs amid elevated prices, the Conference Board said.

Emerging Markets

In emerging markets, consensus earnings per share estimates are ``too optimistic,'' Morgan Stanley strategists wrote in a note. Earnings will likely grow 7 percent in 2009, compared with consensus of more than 18 percent, Jonathan Garner wrote.

Cesp, as the electric generator and distributor is known, led declines on the index, falling 6.1 percent to 22.51 reais.

Brazil's federal government refused to renew licenses for two Sao Paulo dams beyond the expiration year of 2015, a move that would facilitate the sale of Cia. Energetica de Sao Paulo, Estado de S. Paulo reported.

To contact the reporter on this story: Paulo Winterstein in Sao Paulo at pwinterstein@bloomberg.net.