Brazilian stocks dropped for a fourth day, the longest losing streak this year, as commodity prices declined and Goldman Sachs Group Inc. said stalling economic growth will hurt bank earnings. Cia. Vale do Rio Doce fell for a fourth day on speculation the Chinese government will have a better position in iron-ore price negotiations after state-owned Aluminum Corp. of China invested $19.5 billion in Rio Tinto Group. Steel and iron ore producer Cia. Siderurgica Nacional SA led declines on the Bovespa index. Banco do Brasil SA and Banco Bradesco SA sank more than 2.6 percent as Goldman cut profit estimates for Brazil’s lenders. “We’ve seen reductions in investment, consumptions and exports,” said Rodrigo Bresser-Pereira, a hedge fund manager at Bresser Administracao de Recursos in Sao Paulo. “There’s not much certainty in Brazil because we haven’t seen any signs of improvement, nor any real indications that the situation has stabilized.” The Bovespa fell 0.8 percent to 40,500.79. Chile’s Ipsa slumped 0.6 percent, and Mexico’s Bolsa retreated 0.8 percent at 3:37 p.m. New York time. The MSCI Emerging Markets Index declined 2.2 percent. The Bloomberg Base Metals 3-Month Price Commodity Index dropped for a fourth day, dropping 0.5 percent. Vale fell 1.6 percent to 29.80 reais. Chinalco, as the state-owned company is known, will buy $7.2 billion of convertible bonds and acquire stakes in projects for $12.3 billion in Chile, Australia and the U.S., London-based Rio said today in a statement. Chinalco will own 18 percent of Rio, the world’s third-largest mining company, should it convert the debt. Bargaining Power The deal will bolster China’s bargaining power to set iron- ore prices, the China Iron and Steel Association said. “This will help China break the duopoly in Australian iron- ore supply over the long term,” Shan Shanghua, secretary general of the producer-funded association, said in a phone interview from Beijing. Cia. Siderurgica Nacional SA, a steelmaker that also mines iron-ore, fell 3.2 percent to 35.60 reais. Banco do Brasil slipped 2.7 percent to 13.95 reais. Bradesco lost 2.8 percent to 21.82 reais. The average earnings estimate for Brazilian banks was reduced by 6 percent for this year and 8 percent for 2010, Goldman Sachs analyst Jason Mollin wrote in a report today. The firm cut the earnings-per-share estimate for Brazilian banks twice in January. ‘Tougher 2009’ “While we remain constructive on long-term trends and the secular growth story of the sector, we are more cautious in the short term, especially as consensus continues to move towards a tougher 2009,” Sao Paulo-based Mollin wrote. Goldman Sachs expects zero economic growth for Brazil in 2009. The Bovespa pared its advance this year to 7.9 percent. It is among the world’s top-five performing benchmarks in 2009 on speculation government efforts to support growth and falling interest rates will help the economy expand and increase demand for equity. The measure slid 41 percent in 2008, the most ever. The BM&FBovespa Small Cap Index slipped 0.1 percent, while the BM&FBovespa MidLarge Cap Index fell 0.9 percent. In Mexico, Telefonos de Mexico SA, the nation’s largest fixed-line phone company, dropped 3.3 percent to 11.15 pesos after Grupo Financiero IXE said new regulation may cost the company market share. New rules on access to phone networks could “create a substantial loss of market share for market leaders, as well as inhibiting new investment,” Manuel Jimenez, an IXE analyst in Mexico City, wrote in a research note late yesterday. Elsewhere in Latin America, Argentina’s Merval fell 2.1 percent, Colombia’s IGBC slipped 0.8 percent and Peru’s Lima General index declined 0.8 percent.

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