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March 3 (Bloomberg) -- The Bovespa stock index retreated from a two-week high as drop in transportation companies on speculation the global economic recovery will slow offset a rise in Petroleo Brasileiro SA on higher oil prices.

ALL America Latina Logistica SA tumbled 2.5 percent on concern Latin America’s biggest railroad operator will say earnings were hurt by rains. LLX Logistica SA, the port company controlled by Brazilian billionaire Eike Batista, fell the most on the Bovespa. Petrobras, Brazil’s state-controlled oil company, rose as oil climbed above $81 a barrel.

Stocks erased gains after shares in the U.S., Brazil’s second-largest export market, pared their rise as the Federal Reserve said commercial real estate and loan demand stayed weak and the government moved closer to limiting banks’ trading.

“The impression we’re getting is that it’s going to be really difficult for the recovery in the American economy to get off the ground,” said Guilherme Sand, who helps manage the equivalent of $400 million at Solidus Brokerage in Porto Alegre, Brazil. The strengthening of the U.S. economic recovery is among the most important elements for improving investor sentiment in Brazil and globally, he said.

The Bovespa lost 0.2 percent to 67,641.34 after climbing as much as 1.5 percent earlier. Thirty-four stocks fell on the index while 26 gained. The BM&FBovespa Small Cap index lost 0.8 percent to 1,173.54. The real strengthened 0.1 percent to 1.7915 per U.S. dollar.

Greece Deficit

Stocks rose earlier as signs the job market in the U.S. is improving and plans to reduce the deficit in Greece spurred investor appetite for higher yielding assets.

The Bovespa had slumped as much as 11 percent from a 19- month high in January as China curbed bank lending to slow its economy and concern mounted that European nations would be unable to pay their debts.

Curitiba-based ALL lost 2.5 percent to 16.05 reais. The company is scheduled to report earnings next week and “investors are expecting a very bad fourth quarter,” said Fernanda Marques, an analyst at Banco do Brasil SA. “Rains paralyzed some operations.”

Petrobras increased 0.1 percent to 35.15 reais. Oil rose to a seven-week high after a U.S. government report showed that refinery operating rates climbed to the highest level since October, bolstering demand. Petrobras’s biggest minority shareholder said the state-controlled company may issue up to $40 billion in shares, less than some analysts forecast, as part of a plan to swap stock for oil off Brazil’s coast.

Bovespa Index Drops as Economic Concern Offsets Petrobras Gain - BusinessWeek