The index had climbed earlier in the day after data showed the US economy grew at a 5.7 percent annual pace in the fourth quarter, beating forecasts. But stocks swung into negative territory later in the day nonetheless. "The market has been weak for a while," said Leonel Pitta, an analyst with consulting firm Lopes Filho and Associados. "After the initial euphoria (of the US GDP numbers), the markets resumed their downward trend."
Also weighing on stocks, he said, were continued worries over Europe, where Greece, Portugal and Spain have all faced recent concerns over fiscal stability. Brazil's currency, the real, extended a losing streak to a ninth straight session. The currency weakened 1 percent to 1.885 per US dollar, bringing its losses in January to 7.53 percent.
Among Brazilian stocks, Petrobras led losses among the market's heavyweights. Shares of the state-controlled energy giant shed 1.27 percent to 34.17 reais as the stronger dollar, choppy equities and demand worries all weighed on crude. Also dropping were heavyweight private sector banks Itau Unibanco and Bradesco. Itau Unibanco, the country's largest private-sector bank by assets, slid 2.06 percent to 36.13 reais. Bradesco slipped 1.35 percent to 31.33.
Shares of Brazilian shopping mall operator Aliansce Shopping Centers fell 2.56 percent to 8.77 reais on their first day of trade. That stock is not part of the Bovespa index. Utility Cesp closed up 3.48 percent to 23.49 reais after jumping as much as 12 percent earlier in the day on talk the government could renew concessions for electric utilities, though the government later said no changes were imminent. Changes in yields on Brazilian interest rate futures contracts were mixed, with yields on longer-term contracts mostly falling.
The yield on the contract due January 2011 traded marginally higher at 10.34 percent. The yield on the contract due January 2012 ticked down to 11.73 percent from 11.75 percent. Both were among the most active contracts of the day. Investors use the contracts to bet on trends in the country's benchmark interest rate, the Selic, which policymakers held at a record low 8.75 percent late on Wednesday. Brazilian Finance Minister Guido Mantega said in Davos on Friday that the government had no plans to renew tax breaks that have helped automakers and home appliance manufacturers boost sales as there was no need for the additional stimulus.
"The Brazilian economy is undergoing growth which is sustainable growth and is not going to generate inflation. I don't see any signs of inflation," he told a news conference. The central bank uses an inflation target, pegged in 2010 at 4.5 percent, plus or minus 2 percentage points, as a guide in setting interest rates.