Brazil Stocks Close Down On Fed Tapering Move

RIO DE JANEIRO--Brazilian stocks closed moderately lower Wednesday, as the U.S. Federal Reserve's decision to continue tapering its monetary stimulus measures put a damper on equities worldwide.

The local Ibovespa index of most-traded shares closed 0.6% lower at 47556.78 points. Volume was normal at 6.45 billion Brazilian reais ($2.65 billion).

In an expected decision, the Fed on Wednesday opted to shave another $10 billion off its monthly bond-buying program, which will henceforth amount to $65 billion.

The stimulus, intended to support economic growth by effectively reducing borrowing costs, is a legacy of the 2008-09 financial crisis and global recession that had the side effect of sending yield-hungry investors into stocks and emerging-market stocks.

State-owned energy firm Petrobras was among the big decliners in Brazil Wednesday, falling 1.9% to BRL14.76, and banking giant Bradesco tumbled 2.7% to BRL25.77.

Brazil's real also weakened to BRL2.4342 to the dollar from BRL2.4281 at Tuesday's close, reflecting a broader trend in currency markets.

But in doing so, the local currency became less overvalued--good news for Brazil's exporters and steel companies, which face the constant threat of imports from abroad.

Mining titan Vale shares surged 3.9% to BRL30.00, steelmaker Gerdau rose 1.1% to BRL16.87, and paper and pulp maker Fibria jumped 6% to BRL27.21.

Write to Paul Kiernan at [e-mail]