Brazilian Stocks Fluctuate on Inflation Concern; Real Slips

By Alexander Ragir

Jan. 27 (Bloomberg) -- Brazilian stocks fluctuated from gains to losses as heightened concern accelerating inflation will prompt central banks to increase interest rates overshadowed a gain in steelmakers.

Usinas Siderurgicas de Minas Gerais SA, Brazil’s second- biggest steelmaker, jumped after Itau Unibanco Holding SA upgraded the stock on prospects of a 30 percent rise in domestic sales this year. BM&FBovespa SA, the owner of Latin America’s biggest bourse, sank after Goldman Sachs Group Inc. stripped the stock of its “buy” rating, citing prices relative to earnings prospects.

The Bovespa stock index fell 0.1 percent to 65,429.46 at 8:40 a.m. New York time. Thirty-nine stocks rose on the index while 21 fell. The BM&FBovespa Small Cap index added 0.3 percent to 1,144.75. The real lost 0.7 percent to 1.8474 per dollar on concern slower global growth will cut demand for commodities and slow foreign-currency inflows.

Investors around the world are concerned that economic growth will falter as the Federal Reserve and European Central Bank curb stimulus measures and economists predict central banks in China, India, Brazil and Australia will push up borrowing costs.

Brazil’s central bank will probably hold the overnight rate at 8.75 percent for a fourth straight meeting today, according to all 41 economists surveyed by Bloomberg. The bank’s statement accompanying the decision may indicate policy makers’ willingness to raise rates in April to keep inflation in line with their 4.5 percent target, said Benito Berber, senior analyst for Latin America at RBS Securities Inc.

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