Brazil Stocks Fall, Led by Steelmakers, Retailers; Bolsa Drops

By Alexander Ragir

Oct. 21 (Bloomberg) -- Brazilian stocks fell the most in three days, led by steelmakers and retailers, as UBS AG cut its earnings estimates for the country's biggest merchants and metal prices tumbled on the economic slowdown.

B2W Cia. Global do Varejo paced a decline in retailers after UBS reduced its average earnings estimate for the industry by a third. Aracruz Celulose SA, the pulp producer that reported a 1.64 billion reais loss from bad currency bets, dropped after Deutsche Bank AG and Morgan Stanley downgraded the stock. Cia. Siderurgica Nacional SA declined as a gauge of metal prices slumped to the lowest since November 2005.

The Bovespa index fell 2.1 percent to 38,602.83 at 9:48 a.m. New York time. The BM&FBovespa MidLarge Cap index slid 2.1 percent to 578.01, while the BM&FBovespa Small Cap index slipped 1.8 percent. Mexico's Bolsa Index fell 0.1 percent and Chile's Ipsa declined 0.5 percent.

UBS analyst Jander Medeiros reduced his share-price and earnings estimates for the country's retailers, citing a ``deteriorating'' consumer environment.

Lojas Americanas SA, Brazil's largest discount retailer, had its profit estimate cut 33 percent in 2009 and 38 percent in 2010, while its share-price forecast was lowered by 39 percent. The stock fell 3.4 percent to 5.65 reais.

B2W sank 3.2 percent to 26.81 reais.

Commodity Prices Fall

CSN, Brazil's third-biggest steelmaker, fell 3.2 percent to 30.99 reais.

The Bloomberg Base Metals 3-Month Price Commodity Index dropped for a second day, falling 3.6 percent to 146, the lowest since Nov. 30, 2005. Separately, Baoshan Iron & Steel Co., China's biggest steelmaker, cut prices for the third straight month, reducing them by as much as 20 percent, as an economic slowdown forces carmakers and builders to slash orders.

Aracruz dropped 3.8 percent to 3.32 reais. The world's biggest eucalyptus-pulp maker was cut to ``hold'' from ``buy'' at Deutsche Bank.

``We were overly optimistic about the supply/demand scenario,'' analyst Josh Milberg wrote in a note in which he cut share-price estimates for three Brazilian pulp producers.

To contact the reporter on this story: Alexander Ragir in Rio de Janeiro at aragir@bloomberg.net.