(Bloomberg) -- Brazilian stocks declined from a 15-month high as a drop in commodity prices made Vale SA and Petroleo Brasileiro SA among the benchmark gauge's worst performers.
The Ibovespa fell 1.3 percent to 56,919.78 at the close of trading in Sao Paulo. Petrobras, as the state oil producer is known, declined 2.7 percent as crude oil fell after a government report showed U.S. inventories unexpectedly rose for the third week in a row. Vale was one of the biggest contributors to the gauge's drop, losing 3.7 percent as iron ore prices slumped. Homebuilder Cyrela Brazil Realty SA fell the most in six weeks after reporting earnings that missed analysts' forecasts.
A gain fueled by optimism over suspended President Dilma Rousseff's impeachment was short lived. Stocks had climbed as much 0.5 percent earlier following a Senate vote to start the trial that could permanently remove her from office. Bets that her successor, acting President Michel Temer, can kick-start Latin America's biggest economy and rein in a budget deficit have turned the Ibovespa into the world's best performing equity index this year.
"Lower iron ore prices are weighing on Vale,” said Vitor Susaki, analyst at Lerosa Investimentos, from Sao Paulo. "Investors are also taking profit after a eight-week rally in stocks."
The final vote on impeachment is expected to take place in late August or early September, with a two-thirds majority needed to permanently remove Rousseff.
Lawmakers also approved legislation limiting the growth of state expenditures. While the result supports Temer's efforts to shore up public finances, his administration was forced to make a concession after negotiations between federal authorities and state governors, who had asked the government to make it easier for them to repay the 427 billion reais ($136 billion) they owe the Treasury.
--With assistance from Anna Edgerton Mario Sergio Lima and Raymond Colitt To contact the reporter on this story: Aline Oyamada in Sao Paulo at aoyamada3@bloomberg.net. To contact the editors responsible for this story: Brendan Walsh at bwalsh8@bloomberg.net, Jessica Brice
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