Brazil stocks fall led by banks, real weakens

Tue May 6, 2008 11:21am EDT
SAO PAULO, May 6 (Reuters) - Brazil's stock market fell on Tuesday for the first day in four, led by a decline in banking shares on expectations that demand for loans will slow as domestic interest rates rise, while the national currency was dragged down by lower equity markets at home and abroad.
The Sao Paulo Stock Exchange's benchmark Bovespa index .BVSP fell 0.43 percent to 69,875.04 points after closing at an all-time high the previous session. Shares of TIM Participacoes slumped 9 percent after the company reported its first-quarter loss widened, also helping push the index lower.
The Brazilian real BRBY weakened for a second session, down 0.18 percent to 1.663 per U.S. dollar, weighed down by the decline in equity markets in the United States, Europe and in Brazil.
"We figured there would be some profit taking from stock market investors and, as a consequence, a considerable drop in the currency," said Vanderlei Arruda, manager of foreign exchange trading at the Souza Barros brokerage.
Interest-rate futures <0#dij:> on the BM&F commodities and futures exchange in Sao Paulo were mostly higher after data on Tuesday showed prices in Brazil's largest city quickened in April. Inflation in Sao Paulo rose 0.54 percent last month, faster than the 0.31 percent gain in March, the Fipe research institute said.
On the stock exchange, TIM Participacoes (TCSL4.SA: Quote, Profile, Research), Brazil's second-largest mobile phone company, tumbled 9.3 percent to 5.17 reais. The company reported a first quarter net loss of 107.93 million reais, five times wider than the 19.46 million reais loss in the year-earlier period as provisions for bad debt surged 57 percent after an aggressive campaign to sign up new clients at the end of 2007.
Itau (ITAU4.SA: Quote, Profile, Research), Brazil's second-largest private sector bank, fell 3.14 percent to 48.19 reais. The bank said on Tuesday its first-quarter profit rose 7.5 percent to 2.04 billion reais from a year earlier and was up 0.7 percent from the fourth-quarter. Loan growth slowed to 7.9 percent quarter-on-quarter after expanding 11.9 percent in the fourth-quarter. For details please see [ID:nN06364869].
Other banks also fell on concerns growth in lending, one of the main sources of profits for the financial sector in past quarters, may slow further because of an increase in domestic interest rates. Bradesco (BBDC4.SA: Quote, Profile, Research) fell 3.23 percent to 39 reais, while Unibanco (UBBR11.SA: Quote, Profile, Research) was down 2.39 percent to 24.91 reais.
State-controlled oil company Petrobras (PETR4.SA: Quote, Profile, Research) rose 1.48 percent to 44.5 reais as crude prices rose about 1.5 percent in London and New York on concerns over tight supplies.
Mining company Vale (VALE5.SA: Quote, Profile, Research), the second most heavily weighted stock in the Bovespa index, rose 1.1 percent to 55 reais, buoyed by firmer prices of copper and other industrial metals. (Reporting by Elzio Barreto and Silvio Cascione, Editing by Chizu Nomiyama)