RIO DE JANEIRO--Brazilian stocks closed down Tuesday as
heavyweight mining firm Vale SA plunged to its lowest price since
2008 after Citi Research recommended investors sell the company's
shares.
The benchmark Ibovespa stock index fell 0.5% to 52474.27
points.
Brazil's real exited active trading at BRL2.5630 to the dollar,
according to Tullett Prebon via FactSet, weaker than its Monday
close of BRL2.5542.
Leading the local stock market lower Monday was Vale, one of the
Ibovespa's heaviest components, which dropped 3.7% to BRL19.44, its
lowest close since December 2008 on an adjusted basis.
Citi Research downgraded its recommendation on Vale to sell from
neutral after reducing its 2015-16 price forecast for iron ore to
$65 per ton from $80 on a surge in low-cost supply. Vale is the
world's largest producer of the commodity and relies on iron ore
for the bulk of its cash flow.
"Vale's shares are at multi-year lows but we see little chance
for the stock to outperform if this iron-ore price forecast is
accurate," Citi analysts led by Alexander Hacking said in a
note.
Mr. Hacking reiterated his sell recommendation on another
Brazilian company, steelmaker Companhia Siderurgica Nacional, on
assumptions that the firm's own iron-ore mining operations would
break even or lose money at the $65 price level.
Shares of CSN, as the company is known, tumbled 4.5% to
BRL7.48.
State-owned energy giant Petrobras shares rose 0.1% to close at
BRL14.00.
Write to Paul Kiernan at paul.kiernan@wsj.com