BRASILIA, June 14 (Reuters) - Economic activity in

Brazil started the second quarter in stagnation, a central bank

index showed on Friday, frustrating market expectations.

The IBC-Br economic activity index, a key predictor of gross

domestic product (GDP), rose by a seasonally adjusted 0.01% in

April over the previous month, falling short of the 0.45% growth

forecast by economists surveyed by Reuters.

On a non-seasonally adjusted basis, the index increased by

4.01% over April 2023, while the expansion in the 12-month

period was 1.81%.

The April data came in below expectations despite still not

incorporating the negative effects of devastating floods in Rio

Grande do Sul state in May, which affected the infrastructure of

hundreds of cities and displaced over half a million people.

Rodolfo Margato, an economist at broker XP, said the April

data reflects mixed signals from key indicators, with a

contraction in the volume of sales in extended retail, mixed

industrial production figures and growth in the services sector.

"The early signs from the IBC-Br for the second quarter

point to a more moderate performance than that seen in early

2024," he said, projecting a 0.5% growth over the first quarter.

A robust labor market helped to boost the largest economy in

Latin America in the first quarter, sustaining household

consumption.

The increase in investments also contributed to the GDP

expanding by 0.8% from January to March compared to the previous

quarter, but economists had been anticipating a slowdown ahead,

partly due to the impact of the tragedy in the southern region

of the country.