The Ibovespa fell 0.3% to close at 160,490 on Monday, weighed down by losses in banking and commodity linked stocks. Financials led the declines, with Santander sliding 2.7% and Banco do Brasil down 0.6%. Heavyweight Vale dropped 1.5%, while WEG, Rede D’Or and Sabesp fell between 0.7% and 1.7%. Elsewhere, Azul extended its selloff after plunging nearly 30% on Friday following the issuance of roughly 1.4 trillion new shares, which sharply diluted existing shareholders. In contrast, Petrobras and Ambev both gained about 0.5%. Despite the weaker session, markets continued to price in a resumption of interest rate cuts next year, after the IPC M inflation index unexpectedly eased on the month, delivering a 1.05% deflation reading for the year instead of the anticipated increase.