Vale SA (VALE5), Brazil’s largest exporter, said further local currency depreciation could counter cost rises and a slowdown in Chinese iron-ore demand as it seeks to regain market share from Rio Tinto Group and BHP Billiton Ltd. (BHP)

The real, the worst-performing emerging-market currency in the past three months, probably will weaken to about 2.40 from 2.15 per U.S. dollar, bolstering Brazil’s competitiveness, said Jose Carlos Martins, Vale’s executive director for ferrous and strategy. China’s iron-ore and steel demand growth is set to slow to about 5 percent from 10 percent in the first five months of the year, he said.

“The Brazilian currency will devalue further,” Martins, 63, said in a June 14 interview at the company’s Rio de Janeiro headquarters. “The slowdown in China is negative, devaluation is positive because not only our costs in dollars will be reduced but also investments will be lower.”

Vale is seeking to return to profit growth and boost investor confidence by cutting costs, selling assets and focusing on the iron-ore business, its most lucrative unit. The company, the worst-performing major mining stock this year, posted first-quarter profit that surpassed analysts’ expectations for the first time in eight quarters.

The real lost 7.8 percent against the dollar in the past three months through yesterday to the weakest level in four years as faltering economic growth and speculation the U.S. Federal Reserve will pare back monetary stimulus lures money away from Latin America’s biggest economy. The Brazilian currency depreciated 0.9 percent to 2.1712 per dollar today, the weakest level since May 2009.

Forecasts Cut

May industrial production in China, where Vale sells almost 50 percent of its iron ore shipments, grew a less-than-forecast 9.2 percent from a year earlier, the weakest increase in the first five months of the year since 2009. China’s economic expansion held below 8 percent for the past four quarters, the first time that has happened in at least 20 years.

The world’s biggest metals consumer is expected to expand 7.8 percent in 2013, according to the median estimate in an economists Bloomberg survey last month, down from an 8 percent pace forecast in April. The World Bank reduced its forecast to 7.7 percent from 8.4 percent in a June 12 report.

China can grow 7 percent to 8 percent for the next two or three years as the economy shifts toward consumption and away from infrastructure, said Martins, who estimates he’s spent a total of a year and a half in China since joining Vale in 2004.

“As they are moving more to consumption, it’s less steel-intensive,” he said. “That’s a fact of life.”

Share Tumble

Shares in the world’s third-largest mining company declined 31 percent in Sao Paulo this year through last week, under-performing the 19 percent drop by Brazil’s benchmark Ibovespa Index (IBOV). BHP and Rio Tinto, the largest mining firms, fell 13 percent and 21 in Sydney and London, respectively. Vale gained 0.4 percent to 28.40 reais in Sao Paulo trading today.

Iron-ore prices dropped as much as 31 percent from a 16-month high in February on weaker demand from China. The steel-making ingredient gained 1.4 percent to $113.60 a ton on June 14, based on an index compiled by The Steel Index Ltd. Prices may weaken to $100 a ton by 2016 after averaging $125 a ton this year, according to data compiled by Bloomberg.

Future Prices

China’s decision last week to scrap a licensing system for iron-ore imports may increase market transparency, reduce volatility and signal that the government of President Xi Jinping is taking a more pro-business approach, Martins said during the interview.

Vale sold 34 percent of its iron ore at spot prices on delivery at port in the first quarter, compared with 2 percent last year, the company said in an April 25 presentation. Clients in China are increasingly buying at future prices to avoid the steel-making ingredient’s fluctuations during the 45 days it takes to delivery from Brazil, Martins said.

“There is no risk for customers and so they are fulfilling their contracts,” he said.

To contact the reporters on this story: Juan Pablo Spinetto in Rio de Janeiro at jspinetto@bloomberg.net; Laurie Hays in New York at lhays1@bloomberg.net

To contact the editor responsible for this story: James Attwood at jattwood3@bloomberg.net

Enlarge image

Vale Sees China Slowdown Blunted by Brazil Currency Depreciation

Dado Galdieri/Bloomberg

Dump trucks transport mined iron ore at Vale SA's Brucutu mine in Barao de Cocais, Brazil.

Dump trucks transport mined iron ore at Vale SA's Brucutu mine in Barao de Cocais, Brazil. Photographer: Dado Galdieri/Bloomberg

SAO PAULO (AP) -- Protesters massed in four Brazilian cities Monday in what they hoped would be their biggest demonstrations yet against a hike in public transport fares, stoking fears of more clashes with police and raising questions about security during big events like the current Confederations Cup and a papal visit next month.

With the nation's reputation on the line, authorities vowed to avoid the sort of bloody confrontations that shocked Sao Paulo last week. Police commanders said publicly they would not fire rubber bullets during the protest or use riot police units.

Authorities said they would respond with force only if protesters destroyed property.

On Thursday in Sao Paulo, riot police charged into crowds of peaceful protesters, firing rubber bullets and tear gas and beating some demonstrators. Protest organizers said more than 100 people were hurt. Police only confirmed about a dozen injuries.

Police used tear gas and rubber bullets again Sunday when several hundred protesters marched near Maracana stadium before a Confederations Cup match between Italy and Mexico, part of an eight-team warm-up tournament for next year's World Cup finals in Brazil.

But there were no clashes Monday as thousands of people protested before a Confederations Cup match between Tahiti and Nigeria in the city of Belo Horizonte, where police helicopters buzzed overhead and mounted officers patrolled the stadium area. Police put the number of protesters at around 20,000, according to a report on the G1 news website. Earlier in the day, demonstrators erected several barricades of burning tires on a nearby highway, disrupting traffic.

The protests were set off by a 10-cent hike in public transport fares, but they have clearly moved beyond that issue to tap into widespread frustration in Brazil about a heavy tax burden, politicians widely viewed as corrupt and woeful public education, health and transport systems.

Monday's protest in Sao Paulo got off to a calm start late in the day, with some demonstrators turning out in clown costumes complete with red rubber noses. Samba percussion circles, including one led by a drag queen in a blond wig and sporting oversized dollar-sign earrings, pounded out competing rhythms as the crowd of several hundred grew steadily thicker.

Demonstrator Marcos Lobo, a 45-year-old music producer, said earlier police brutality had persuaded him to come out for Monday's demonstration.

"I thought they (the protests) were infantile at first because of my preconceived notions," Lobo said. "Then I saw the aggression."

Another protester, Manoela Chiabai, said she came out to express her dissatisfaction with the status quo.

"Everything in Brazil is a mess. There is no education, health care - no security. The government doesn't care," the 26-year-old photographer said. "We're a rich country with a lot of potential but the money doesn't go to those who need it most."

Demonstrations also were being held in the capital of Brasilia and in Rio de Janeiro. Thousands of protesters, many dressed in white and brandishing placards and banners, turned out in both cities. Many people in Rio left work early to avoid traffic jams downtown.

In Brasilia, several thousand people under heavy police escort marched on the Esplanada dos Ministerios thoroughfare that cuts between rows of government ministry buildings.

Ariadne Natal, a professor at the University of Sao Paulo whose research focuses on violence, said protesters want to "take advantage of this moment when we have foreign visitors, when the world's press is watching, to showcase their cause."

"The problem we've seen is that the police action is trying to prevent these protests," she said. "What we need to figure out is how the protests as well as the big events can be carried out democratically."

Brazilians have long accepted malfeasance as a cost of doing business, whether in business or receiving public services. Brazilian government loses more than $47 billion each year to undeclared tax revenue, vanished public money and other widespread corruption, according to the Federation of Industries of Sao Paulo business group.

But in the last decade, about 40 million Brazilians have moved into the middle class and they have begun to demand more from government. Many are angry that billions of dollars in public funds are being spent to host the 2014 World Cup and 2016 Olympics while few improvements are made elsewhere.

Protests are routine in Brazil, but few turn violent, and security experts say the demonstrations aren't the main danger for the hundreds of thousands of visitors who will descend on Brazil from now through the Olympics.

"The biggest threat to those visiting Brazil for the Confederations Cup and other events we'll host remains petty crime," said Paulo Storani, a security consultant and former commander of an elite police unit in Rio.

For the Confederations Cup, Brazilian officials are using drones, thermal cameras and thousands of troops to patrol the six stadiums hosting matches in six different cities.

Storani and other security experts said visitors will be most vulnerable once they venture away from secured areas, and may even face increased risks of petty crime because many police have been called off their regular patrols to focus on the stadiums and protests.

However, Joe Biundini, whose FAM International Group provides security details to executives attending the Confederations Cup, warned of the danger of escalating violence if the government doesn't negotiate with demonstrators.

"If the government doesn't sit down with them it could get worse in future matches," Biundini said, calling the police response to Sunday's protest in Rio excessive.

"It was a peaceful protest and they responded with a very heavy hand," he said. "I'm a little concerned that the government of Rio is pulling out a heavy fist and that might just create more violence in the future."

Copyright 2013 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

13 hours ago

For soccer fans flocking to Confederations Cup matches in Brazil's tropical northeast next week, getting tickets to the stadium should be simple - but two in three will not find accommodations in the host city Recife.

Officials are sending visitors as far as 120 kilometers (75 miles) inland to spend the night, a detour on par with staying in Philadelphia for a New York Knicks game.

The tournament starting Saturday, a dress rehearsal for the 2014 World Cup, will lay bare for visitors what may surprise many: despite gorgeous beaches, a tempting climate and legendary hospitality, Brazil's tourism industry pales next to its neighbors.

How has Brazil - blessed with 7,500 kilometers of sunny coastline, the fame of Rio de Janeiro and the wonders of the Amazon - managed to blow such an open shot on goal?

Even in Recife's more expensive hotels, introducing oneself in English can prompt blank stares and embarrassed grins. In one case, the concierge at a hotel - FIFA-certified accommodation for the World Cup - went silent after such an introduction.

"Hello, my name is?" he then asked, furrowing his brow.

Due to Brazil's size, isolation and uneven education, most residents have little or no contact with a second language. Brazil's English proficiency ranked in the bottom 15 percent of a global study by teaching company Education First.

"If you can afford English lessons, you're not going to work the front desk of a hotel," said Gunde Schneider, a Brazilian of German descent with a bed-and-breakfast in nearby Gravata. "More likely, you're the owner of the hotel."

The road to Recife

An easy flight to Recife will also be tough to find, due to a legacy of barriers to foreign airlines. Of over 100 nations that have signed an open skies agreement with the United States, Brazil is one of a handful that have not put it into practice.

As a result, flights funnel into Sao Paulo and Rio, where airports are packed beyond capacity. Foreign visitors to Brazil's northeast can often watch their final destinations through the window as they fly south to catch connecting flights from the major hubs - a six-hour round trip.

When a fan lands in Recife, the journey is still far from over. The wait in the cab line should last at least half an hour thanks to the monopoly of the airport taxi cooperative - one of countless barriers to competition driving up prices.

The World Economic Forum also blames Brazilian policies discouraging foreign investment in land, airlines and tourism services for the lack of affordable offerings.

The WEF ranked Brazil's natural resources for tourism as the best in the world, but the competitiveness of its travel industry has slipped to 51st in a ranking of 140 nations.

Harmful regulations, high prices and bad roads put Brazil among the worst 25 countries in those categories - below the likes of Kazakhstan and Gambia in each respect.

The two in three visiting fans without lodging in Recife next week may drive as little as 30 minutes to hotels along the coast or as much as two hours inland for accommodations.

At the far reaches of that radius is Caruaru, a sprawling, low-slung city of 350,000 where newly paved streets wind among walls of exposed cinder block.

Caruaru's hotels seem blithe about the Confederations Cup. With lodging in short supply and local vacationers eager to attend the festival, major hotels are already booked nearly every weekend this month.

Consulted a week ahead, the only rooms left at the Hotel Village Caruaru on Saturday were going for 1,000 reais ($470) a night.

Copyright 2013 Thomson Reuters.

More than 100,000 people took to the streets in eight cities in Brazil Monday to protest high taxes.

SAO PAULO (AP) — More than 100,000 people took to the streets in overwhelmingly peaceful protests in at least eight cities Monday, demonstrations that voiced the deep frustrations Brazilians feel about carrying heavy tax burdens but receiving woeful returns in public education, health, security and transportation.

In Sao Paulo, Brazil's economic hub, at least 65,000 protesters gathered at a small, treeless plaza then broke into three directions in a Carnival atmosphere, with drummers beating out samba rhythms as the crowds chanted anti-corruption jingles. They also focused on the cause that initially sparked the protests last week — a 10-cent hike in bus and subway fares.

Hundreds of protesters in the capital, Brasilia, peacefully marched on congress, where dozens scrambled up a ramp to a low-lying roof, dancing on the structure's large, hallmark upward-turned bowl designed by famed architect Oscar Niemeyer. Some congressional windows were broken, but police did not use force to contain the damage.

"This is a communal cry saying: 'We're not satisfied,'" Maria Claudia Cardoso said on a Sao Paulo avenue, taking turns waving a sign reading "#revolution" with her 16-year-old son, Fernando, as protesters streamed by.

"We're massacred by the government's taxes — yet when we leave home in the morning to go to work, we don't know if we'll make it home alive because of the violence," she added. "We don't have good schools for our kids. Our hospitals are in awful shape. Corruption is rife. These protests will make history and wake our politicians up to the fact that we're not taking it anymore!"

The protests come after the opening matches of soccer's Confederations Cup over the weekend, just one month before a papal visit, a year before the World Cup and three years ahead of the 2016 Olympics in Rio de Janeiro. The unrest is raising some security concerns, especially after protests last week in Sao Paulo and over the weekend in Rio produced injury-causing clashes with police.

Monday's demonstrations saw some violence. In Rio de Janeiro, a small group of protesters set a car on fire and threw rocks and flares at police. In the southern city of Porto Alegre, protesters hurled rocks at commuter trains.

But those were the exceptions to the peaceful norm.

Protest leaders went to pains to tell marchers that damaging public or private property would only damage their cause.

Police, too, changed tactics. In Sao Paulo, commanders said publicly Monday they would try to avoid violence, but warned they could resort to force if protesters destroyed property. During the first hours of the march that continued into the night there was barely any perceptible police presence.

The Sao Paulo march itself was a family oriented affair: A group of mothers received a rousing cheer when they arrived at the plaza where the march began, brandishing signs that said "Mothers Who Care Show Support."

"I'm here to make sure police don't hurt these kids," said Sandra Amalfe, whose 16-year-old daughter chatted with friends nearby. "We need better education, hospitals and security — not billions spent on the World Cup."

Officers in Rio fired tear gas and rubber bullets when a group of protesters invaded the state legislative assembly and hurled things at police. But most of the tens of thousands who protested in Rio did so peacefully, many of them dressed in white and brandishing placards and banners. Many people in the city left work early to avoid traffic jams downtown.

In Belo Horizonte, police estimated about 20,000 people joined a peaceful crowd protesting before a Confederations Cup match between Tahiti and Nigeria as police helicopters buzzed overhead and mounted officers patrolled the stadium area. Earlier in the day, demonstrators erected several barricades of burning tires on a nearby highway, disrupting traffic.

Protests also were reported in Curitiba, Belem and Salvador.

Marcos Lobo, a 45-year-old music producer who joined the protest in Sao Paulo, said the actions of police during earlier demonstrations persuaded him to come out Monday.

"I thought they (the protests) were infantile at first because of my preconceived notions," Lobo said. "Then I saw the aggression."

Another protester, Manoela Chiabai, said she wanted to express her dissatisfaction with the status quo.

"Everything in Brazil is a mess. There is no education, health care — no security. The government doesn't care," the 26-year-old photographer said. "We're a rich country with a lot of potential but the money doesn't go to those who need it most."

In a brief statement, President Dilma Rousseff, who faces re-election next year and whose popularity rating recently dipped for the first time in her presidency, acknowledged the protests, saying: "Peaceful demonstrations are legitimate and part of democracy. It is natural for young people to demonstrate."

Ariadne Natal, a professor at the University of Sao Paulo whose research focuses on violence, said protesters want to "take advantage of this moment when we have foreign visitors, when the world's press is watching, to showcase their cause."

"The problem we've seen is that the police action is trying to prevent these protests," she said. "What we need to figure out is how the protests as well as the big events can be carried out democratically."

Brazilians have long accepted malfeasance as a cost of doing business, whether in business or receiving public services. Brazilian government loses more than $47 billion each year to undeclared tax revenue, vanished public money and other widespread corruption, according to the Federation of Industries of Sao Paulo business group.

But in the last decade, about 40 million Brazilians have moved into the middle class and they have begun to demand more from government. Many are angry that billions of dollars in public funds are being spent to host the 2014 World Cup and 2016 Olympics while few improvements are made elsewhere.

Protests are routine in Brazil, but few turn violent. Security experts say the demonstrations aren't the main danger for the hundreds of thousands of visitors who will descend on Brazil from now through the Olympics in 2016.

However, Joe Biundini, whose FAM International Group provides security details to executives attending the Confederations Cup, said there is a danger of escalating violence from the protests if authorities don't negotiate with demonstrators.

"If the government doesn't sit down with them it could get worse in future matches," Biundini said.

It doesn't bear the high stakes or the sheer size of the World Cup, but when the Confederations Cup kicks off this weekend in Brazil, it will carry plenty of intrigue for soccer fans both around the world and in the U.S.

By moving the tournament to a four-year cycle (beginning in 2009), FIFA has positioned the cup as an appetizer for its biggest event -- a role it performed capably the last time around.

U.S. fans will have no trouble recalling the 2009 edition in South Africa, which generated buzz when the Americans secured a miraculous advancement from the group stage on goals scored, then shocked Spain 2-0 and nearly upset Brazil in the final before falling 3-2.

ESPN's coverage also introduced viewers to the vuvuzela, preparing American ears for the incessant humming sound that would permeate the World Cup and was henceforth banned from many venues in other countries.

This year, there will be no U.S. squad -- and hopefully no vuvuzelas -- but even without Tim Howard Co. leading an improbable roller-coaster ride, there is plenty to watch at the Confederations Cup, which kicks off Saturday when Brazil faces Japan (ESPN, 2:30 p.m. ET) in Brasilia.

Here's a quick look at the eight teams that will compete, hoping to finish in the top two of their group and advance to the semifinals.

YOUNG: Is Brazil ready for the World Cup?

Group A

Brazil (FIFA World Ranking: No. 22)

There's no question that the two-time defending champions have the most at stake here, both on and off the field.

With next summer's World Cup and the 2016 Olympic Games in Rio de Janeiro on tap, the Confederations Cup will provide an early look at everything from stadium readiness to hospitality and security.

That third area is the biggest concern -- especially after the attempted mugging of a British journalist at knifepoint after England's 2-2 draw with Brazil this month -- and police plan to use unmanned aircraft as surveillance drones to keep an eye on crowds.

But there's plenty of pressure from within as well. Luiz Felipe Scolari's team will be expected to win a third straight title, but a record of 2-1-4 in 2013 hasn't been the brightest run of form, save for a 3-0 win over France last week.

All eyes will be on 21-year-old striker Neymar, who became a star at Santos but has yet to produce for the senior national team. FC Barcelona snatched him up in a high-profile transfer this summer, hoping to buy before his value shot up even further. His play at the Confederations Cup will be an early signal of whether the Catalan club invested wisely.

YOUNG: Brazil's face of the World Cup

Italy (No. 8)

Italy qualified by virtue of Spain's recent dominance, as the Euro 2012 champion was already headed to Brazil thanks to its 2010 World Cup title. That meant the Azzurri's runner-up finish at Euro 2012 was enough to secure the UEFA slot, and they'll come in as the host's biggest obstacle in Group A.

Sitting on a comfortable four-point lead in its World Cup qualifying group, Italy arrives looking for a better ending than a 1-0-2 showing at its first Confederations Cup in 2009.

If that is to happen, it will likely involve a big tournament from Mario Balotelli. The AC Milan striker made headlines last week when he was sent off during a qualifier against the Czech Republic, then caught by cameras taking out his frustration by attacking the walls of the tunnel on his way off the field.

But alongside his volatility is undeniable talent, which he flashed prominently with two goals over Germany in the Euro 2012 semifinals.

AC Milan teammate Stephan El Shaarawy will be another player to watch up top, although the hot transfer target was held out of training on Thursday. Balotelli's transfer to Milan marked a drop in form for Shaarawy, who had led Serie A with 14 goals in the first half of the season, but if they can hit their stride together in Brazil, Italy will be hard to stop.

Europe World Cup qualifying outlook

Japan (No. 32)

It's easy to overlook this squad amid the giants in its bracket, but Japan is no pushover.

The Japanese already punched their ticket to the World Cup and sport a 23-5-9 record in three years under Italian coach Alberto Zaccheroni -- whose long career in Serie A will no doubt be of use in Brazil.

The Japanese will be looking for their best finish since a runner-up at the 2001 Confederations Cup, and there's no doubt whom they'll lean on to take them there.

Midfielder Shinji Kagawa didn't meet expectations during his first season at Manchester United, but the former Borussia Dortmund man will have plenty of opportunities to seize the reins for the national team.

It's difficult to imagine Japan making it far without an exceptional showing from the 24-year-old Kagawa, and others will have to step up as well if they are to advance out of a talent-rich group.

Asia World Cup qualifying outlook

Mexico (No. 17)

There are only two groups at the Confederations Cup, making Group A an easy choice for the "Group of Death."

Italy has the pedigree, Brazil has the home-field advantage and Japan makes for an interesting underdog. So where does that leave Mexico?

El Tri undoubtedly has the talent to make some noise in Brazil -- this year and next -- but results haven't been as expected lately, with one win and five draws in CONCACAF World Cup qualifying.

Overall, Mexico has eight draws in nine matches this year, including five scoreless outings against Jamaica, the U.S., Peru, Panama and Costa Rica, the last two of which came in the past week.

That's a befuddling predicament for a squad that boasts the likes of Javier "Chicharito" Hernandez and Giovani Dos Santos, and most of the blame is falling on coach Jose Manuel "Chepo" de la Torre.

With the way things have gone lately, Mexico could certainly find itself last in the group, and that could spell the end of the road for Chepo. His top achievement is the 2011 CONCACAF Gold Cup title that qualified El Tri for the Confederations Cup, but a stumble now might make this his only trip to Brazil.

North America World Cup qualifying outlook

Group B

Nigeria (No. 31)

The Confederations Cup is icing on the cake for the Super Eagles, which qualified by winning their first Africa Cup of Nations title in 19 years.

There's a lot to like about this team, chiefly an unbeaten record of 5-0-6 in 2013, and it wouldn't be a total shock to see Nigeria advance out of the group. Chelsea midfielder John Obi Mikel leads the way, and his presence will be counted on after an already rocky start to the competition.

The Super Eagles didn't travel to Brazil as scheduled on Thursday, as players reportedly refused to board a plane after the Nigerian Football Federation decided to reduce their promised bonuses.

Resolution of the dispute came at the cost of a troublesome travel delay, as Nigeria is set to arrive on Saturday with just one day to train before its opener against Tahiti.

If there's a match to play on short rest, it's that one, but three points are a must before Nigeria takes on the task of swiping points from Spain or Uruguay.

Africa World Cup qualifying outlook

Spain (No. 1)

The ramifications of Germany's dominance in the Champions League are still being felt, as the swift dismissals of Barcelona and Real Madrid made for a black eye for Spanish soccer.

But Spain is still the ruler of the international game, and the Germans won't be in Brazil, meaning La Furia Roja are the favorites.

Their only previous trip to the Confederations Cup in 2009 resulted in a third-place finish but produced memorable moments like Fernando Torres' 17-minute hat trick, and a star-studded roster will be back for more.

The 23-player squad counts nine from Barcelona, but look for others to have a major impact as well -- most notably Juan Mata, who is coming off another sterling season with Chelsea.

Spain will get its toughest test right off the bat with Sunday's match against Uruguay, but the world champions should light up Tahiti and get past Nigeria for a chance to add to a growing trophy collection.

Tahiti (No. 138)

The winners of the 2012 OFC Nations Cup, Tahiti is like a recreational basketball team sneaking into March Madness as a No. 16 seed.

The island in French Polynesia comes in behind the likes of St. Vincent and the Grenadines in the FIFA World Rankings, just one spot ahead of Afghanistan. Their last two results of 2012 were losses of 2-0 and 3-0 to lowly New Zealand, and their most recent match yielded a 1-0 loss to New Caledonia.

What's more, the population of Tahiti (178,000) could fit 13 times inside the city of Belo Horizonte, the site of its first match in Brazil.

Little is known of the roster, which features only one player who plies his trade off the island. That honor belongs to 33-year-old forward Marama Vahirua of Panthrakikos in Greece, although he previously enjoyed a long career in France, even scoring 10 goals in Ligue 1 with Nice in 2004-05.

Ultimately, Tahiti is little more than a bye for the others in its group, who will no doubt use that matchup as a glorified scrimmage and a chance to rest up.

Uruguay (No. 19)

Perhaps the dark-horse contender to win the whole thing, Uruguay is certainly a team to keep an eye on.

La Celeste notched a fourth-place finish at the 2010 World Cup, winning its group and reaching the semifinals before a 3-2 loss to the Netherlands. They're back and are stocked with talent up front, even if results this year have been subpar. Wins over Venezuela and France this month bode well, but prior losses to Chile (2-0) and Spain (3-1) suggest they have yet to find top form.

But with a strike force that ranks among the world's best, no one will be overlooking Uruguay.

Liverpool's Luis Suarez (23 goals last season), Napoli's Edinson Cavani (29) and Diego Forlan make for an explosive attacking trio, and keeping those three quiet will be a mammoth task for any opponent.

The tournament also marks a big opportunity for Cavani, who is reportedly being courted by both Manchester City and Real Madrid.

South America World Cup qualifying outlook

The 21-year-old striker smashed a 25-meter (27-yard) shot into the top corner of the net at the $750 million Mane Garrincha stadium in Brasilia as Brazil yesterday began the soccer competition with a 3-0 victory over Asian champion Japan.

Neymar, who this month completed a 57-million euro ($100 million) move to Spanish champion Barcelona, is Brazil’s main hope as it seeks to win a record-extending sixth World Cup on home soil next year. In the buildup to today’s game, the former Santos striker had to defend himself from claims he was suffering because of his barren run.

“This is Neymar,” Brazil defender David Luiz said in an interview after the game. “When you speak about him he just replies on the pitch. That’s why he’s a fantastic player.”

While Neymar was cheered by the 67,423 crowd, Brazil President Dilma Rousseff and Sepp Blatter, head of soccer’s governing body FIFA, were jeered and whistled as they made remarks to open the two-week tournament, a warm-up event for the World Cup.

The booing intensified when Blatter admonished the crowd for not showing “fair play” and “respect” to Rousseff. Brazilians have protested projects linked to the World Cup, including the 7 billion reais ($3.3 billion) in public money being spent on 12 stadiums.

Police had earlier used tear gas to break up a demonstration outside the stadium after protestors blocked the main access road for a second straight day. Banners said money earmarked for the World Cup would be better spent on social programs to ease inequality in the world’s sixth-largest economy.

Pele’s Plea

Inside the stadium, one of several whose long-term sustainability has been questioned, Brazil dominated to earn support from a crowd that hasn’t always been behind the team in recent months.

Three-time World Cup winner Pele, Brazil’s all-time leading goal scorer, this week urged supporters to back the team after it was jeered during two of its past three exhibition games. A loss of form has seen the team plummet to a record low of 22nd in FIFA’s world rankings.

“The team has been improving game by game,” said Luiz. “We can understand more about the philosophy of our coach Felipao. Game by game we can improve and do better things.”

Neymar, whose image was pasted onto a giant poster on a high-rise building close to the stadium by one of his 12 sponsors, made his impact within minutes of an emotionally charged rendition of the national anthem that had goalkeeper Julio Cesar in tears.

Medical Attention

After strike partner Fred laid the ball off with his chest, Neymar hit a half-volley beyond Eiji Kawashima. The Japan goalkeeper prevented Brazil extending its lead with a save at full stretch from Fred’s low shot.

Paulinho doubled Brazil’s lead three minutes after halftime when Kawashima allowed the midfielder’s shot to slide under his body. Neymar, who received medical attention following a collision with an opponent, was replaced by Paris Saint-Germain’s Lucas Moura with 15 minutes to go. Substitute Jo completed the scoring for the host nation in injury time at the end of the game.

Group A rivals Mexico and Italy meet today in Rio de Janeiro when world champion Spain opens its tournament against Uruguay in Group B. Nigeria and Tahiti, the remaining teams in the competition, play tomorrow.

To contact the reporter on this story: Tariq Panja in Rio de Janeiro at tpanja@bloomberg.net

To contact the editor responsible for this story: Christopher Elser at celser@bloomberg.net

BRASILIA, Brazil (AP) -Neymar started to live up to the huge expectations of a demanding public only three minutes into the Confederations Cup on Saturday, scoring an early goal to help Brazil beat Japan 2-0 in the opening match of the tournament.

The Brazil striker scored with a firm shot from outside the penalty area, connecting with the ball after Fred controlled a long cross from Marcelo with his chest. The ball bounced only once before Neymar whacked it in.

For the next two minutes, most of the 67,432 fans at the National Stadium chanted Neymar's name, relishing the knowledge that their poster boy is already starting to deliver for the national team with one year to go before the World Cup.

Paulinho added the second goal for Brazil in the 48th, deftly controlling a cross from Dani Alves before turning inside and shooting. Japan goalkeeper Eiji Kawashima got his hands to the ball, but it was too powerful for him to stop. Jo got the third, latching onto a through ball from Oscar and sliding it past Kawashima in injury time.

The win puts Brazil at the top of Group A with three points. Italy and Mexico will play in the other group match on Sunday.

Neymar entered Saturday's match facing a minor wave of criticism. He has become something of an idol in Brazil, but a nine-match scoreless streak had heaped pressure on the 21-year-old striker heading into the Confederations Cup.

The fickle Brazilian fans, who had taken to booing their team in recent weeks, were firmly behind the "Selecao'' and its star this time, however.

With his hair long on top and short on the sides, Neymar has already started to transcend the game in Brazil, like David Beckham nearly everywhere else. His picture is plastered around the country in underwear and phone ads, to name a few. He has also appeared on Brazilian TV, appearing as himself in one of the country's biggest soap operas.

That's just off the field. On it, Neymar has earned himself a massive transfer from local club Santos to Barcelona, where he will be teammates with Lionel Messi next season.

The match against Japan was likely something Neymar was looking forward to. The Japanese have never beaten Brazil in 10 games, earning only two draws - both at the Confederations Cup, first in 2001 and then again in 2005.

The last time they played, in a friendly in Poland in October, Neymar scored two goals. This time, he was named "Man of the Match.''

Not everything was perfect for the young star on Saturday, however. In the 15th minute, Neymar was stuck on the sidelines fiddling with the socks on his right foot. He came back on the field about two minutes later - after the fans took a moment to boo referee Pedro Proenca for not letting their star back on more quickly.

Midway through the second half, he was briefly knocked down. When he got back up, the fans started chanting his name once again.

And then, about six minutes later, Neymar was taken off and replaced by Lucas. The decision halted the Neymar chants, but not the cheers for Brazil from the yellow-clad faithful.

Copyright 2013 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

BRASILIA, Brazil (AP) — Neymar started to live up to the huge expectations of a demanding public only three minutes into the Confederations Cup on Saturday, scoring an early goal to help Brazil beat Japan 3-0 in the opening match of the tournament.

The Brazil striker scored with a firm shot from outside the penalty area, connecting with the ball after Fred controlled a long cross from Marcelo with his chest. The ball bounced only once before Neymar whacked it in.

For the next two minutes, most of the 67,432 fans at the National Stadium chanted Neymar's name, relishing the knowledge that their poster boy is already starting to deliver for the national team with one year to go before the World Cup.

WATCH: Neymar's stunning strike

Paulinho added the second goal for Brazil in the 48th, deftly controlling a cross from Dani Alves before turning inside and shooting. Japan goalkeeper Eiji Kawashima got his hands to the ball, but it was too powerful for him to stop. Jo got the third, latching onto a through ball from Oscar and sliding it past Kawashima in injury time.

The win puts Brazil at the top of Group A with three points. Italy and Mexico will play in the other group match on Sunday.

Neymar entered Saturday's match facing a minor wave of criticism. He has become something of an idol in Brazil, but a nine-match scoreless streak had heaped pressure on the 21-year-old striker heading into the Confederations Cup.

The fickle Brazilian fans, who had taken to booing their team in recent weeks, were firmly behind the "Selecao" and its star this time, however.

With his hair long on top and short on the sides, Neymar has already started to transcend the game in Brazil, like David Beckham nearly everywhere else. His picture is plastered around the country in underwear and phone ads, to name a few. He has also appeared on Brazilian TV, appearing as himself in one of the country's biggest soap operas.

That's just off the field. On it, Neymar has earned himself a massive transfer from local club Santos to Barcelona, where he will be teammates with Lionel Messi next season.

The match against Japan was likely something Neymar was looking forward to. The Japanese have never beaten Brazil in 10 games, earning only two draws — both at the Confederations Cup, first in 2001 and then again in 2005.

The last time they played, in a friendly in Poland in October, Neymar scored two goals. This time, he was named "Man of the Match."

Not everything was perfect for the young star on Saturday, however. In the 15th minute, Neymar was stuck on the sidelines fiddling with the socks on his right foot. He came back on the field about two minutes later — after the fans took a moment to boo referee Pedro Proenca for not letting their star back on more quickly.

Midway through the second half, he was briefly knocked down. When he got back up, the fans started chanting his name once again.

And then, about six minutes later, Neymar was taken off and replaced by Lucas. The decision halted the Neymar chants, but not the cheers for Brazil from the yellow-clad faithful.

PHOTOS: 2013 Confederations Cup

Copyright 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

The protesters, mainly university students but also activists from leftist political parties, appear to be loosely tied to an organization called the Free Fare Movement, which advocates sharp decreases in public transportation fares or doing away with the fares and financing transit through tax increases.

The protests have been notably unruly in Brazil’s largest city, São Paulo, where police officers arrested dozens of protesters on Thursday night. The police fired rubber bullets and tear gas in São Paulo’s old center on Tuesday night to disperse thousands of protesters, who tried to shut important avenues. Several journalists were also injured, including two reporters hit in the face by rubber bullets fired by the police. The police also arrested at least three journalists covering the protests, prompting rebukes from press-freedom groups.

In Rio de Janeiro on Thursday, more than 1,000 demonstrators halted traffic at rush hour on a heavily congested avenue; on Tuesday night, rock-throwing protesters here damaged churches and historic buildings. Similar protests have also unfolded in smaller cities, including Porto Alegre in the south, Goiânia in the country’s central region and Natal in the northeast.

The free-fare movement has held protests against bus-fare increases in different parts of Brazil in recent years. The latest demonstrations have crystallized around resistance to new fare increases, making it the latest in a sequence of campaigns of dissent over public transportation dating to the Vintém Revolt of 1879, when protesters in Rio de Janeiro challenged Brazil’s monarchy over fares for trolley cars. “The hike in bus fares were the spark for this to happen,” said Maurício Santoro, an adviser here to Amnesty International. “Public transportation in Brazil is expensive, unsafe and poorly managed, especially impacting poor commuters who have no choice but to rely on these systems.”

The protests come at a delicate time for political leaders as they are grappling with concerns over high inflation and sluggish economic growth, and are trying to promote Brazil as a safe and stable destination in advance of the 2014 World Cup and 2016 Summer Olympics, which will be held here.

São Paulo’s mayor and governor were in Paris this week to lobby for the city to be chosen as the site for an international fair, the World Expo 2020. The governor, Geraldo Alckmin, called the protesters “thugs” and “vandals,” insisting that the fare increase would not be revoked.

Marcelo Hotimsky, a student who has taken part in the protests, said they were an expression of frustration. “There are serious issues about mobility and life in the city,” he said. Asked about violent episodes in the protests, he said, “There is a great attempt to make those who go to the protests look like rioters to discredit us.”

Taylor Barnes contributed reporting.

Ethanol futures yesterday reached the highest level since May 8 on the BMF Bovespa, Brazil’s futures exchange. Millers in center south, the country’s main growing region, used 58 percent of all cane processed to make ethanol rather than sugar in May’s second half, data from industry group Unica showed. That was up from 52 percent a year earlier.

“Ethanol production has picked up quite significantly in the last period of Unica’s report, but it remains to be seen whether this continues to be the case,” Stefan Uhlenbrock, an analyst at researcher F.O. Licht GmbH, said by phone today. “The market has come down significantly, so it’s more or less natural that there’s some recovery sooner or later, but I’m rather pessimistic that this would be a sustained recovery.”

Raw sugar for delivery in October rose 0.3 percent to 16.58 cents a pound by 8:31 a.m. on ICE Futures U.S. in New York. White, or refined, sugar for delivery in August advanced 0.4 percent to $475.40 a metric ton on NYSE Liffe in London.

Millers in center south will use 45.2 percent of the cane harvest to make sugar in the 2013-14 season begun in Brazil in April, according to Green Pool Commodity Specialists Pty. That is below a prior estimate of 47.6 percent and last year’s 49.4 percent, the company said in its second estimate for the season.

Cocoa for delivery in September declined 2 percent to $2,263 a ton on ICE. Cocoa for delivery in July fell 2.3 percent to 1,472 pounds ($2,303) a ton on NSYE Liffe.

Ivory Coast, the world’s largest producer of cocoa, will refund exporters and processors buying undersized beans from June 17 to July 31, industry regulator Le Conseil du Cafe-Cacao said today on its website.

The payments will vary from 58 to 130 CFA francs per kilogram, the regulator said. Refunds will apply to purchases of cocoa of 116 to 140 beans per 100 grams.

Arabica coffee for delivery in September gained 0.1 percent to $1.255 a pound on ICE. Robusta coffee for the same delivery month rose 1.6 percent to $1,758 a ton in London.

“The market has been under pressure on improving conditions in Ivory Coast, but has started to find some support with industry buying like they did at the end of May, when the market reached the 1,500 pounds-a-ton area,” Jerome Jourquin, head of agricultural commodity derivatives at brokerage Aurel BGC in Paris, said by e-mail today.

To contact the reporter on this story: Isis Almeida in London at ialmeida3@bloomberg.net

To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net