Brazil stocks post biggest one-day loss since March

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SAO PAULO Oct 28 (Reuters) - Brazilian stocks posted their biggest one-day drop on Wednesday since March 2, as investors, worried by signs of an anemic global economic recovery, pulled back from riskier emerging market assets.

The Bovespa index .BVSP tumbled 4.75 percent to close at 60,162.31 for a second-straight day of losses totaling about 7 percent.

Brazil's currency, the real BRBY, took a beating, too, weakening 0.92 percent to 1.755 to the dollar. The U.S. currency, seen as a safe haven against economic uncertainty, strengthened against a basket of major currencies .DXY.

"We've had a large sell-off in risk over the last couple days," said Steven Butler, head of FX trading at Scotia Capital in Toronto.

"The market is still treading a bit lightly," he said, particularly as the end of the month approaches. "We're in a bit of a corrective mode right now."

Brazilian stocks have appreciated sharply in 2009. Even with losses of the past two days, the index has climbed more than 61 percent in 2009 year to date.

But signs of a so-so recovery in the United States, the world's largest economy, prompted investor fears that the recent rally has come too far too fast. Data on Wednesday showed that sales of new U.S. homes declined unexpectedly in September, underscoring the tenuousness of a recovery in that economy. [ID:nN28304343]

Stocks in the United States tumbled on the news, with the Dow Jones industrial average .DJI 1.21 percent lower.

Because of the size of the U.S. economy, Brazilian investors often follow those markets to gauge investor sentiment and risk appetite.

Leading losses in the Bovespa index were the two biggest stocks, oil giant Petrobras and mining company Vale.

Vale (VALE5.SA) lost 4.54 percent to 37.85 reais. The company is expected to report third-quarter results after the bell on Wednesday. Analysts contacted by Reuters expect the company to report a 70 percent drop in profit over last year.

Petrobras (PETR4.SA) sank 4.76 percent to 34.24 reais on the heels of a 2.63 percent drop in crude CLc1 as U.S. data showed an unexpected increase in gasoline inventories last week. [ID:nN28314427]

Steelmakers gave up some recent gains on the expectations of construction projects for the upcoming 2014 World Cup and 2016 Rio Olympics.

Gerdau (GGBR4.SA) lost 7.16 percent to 25.53 reais, Usiminas (USIM5.SA) declined 6.45 percent to 45.70 reais and CSN (CSNA3.SA) fell 5.02 percent to 56.80 reais.

Homebuilders, gaining recently on hopes of a new government program to spur the construction of low-income housing, slid.

Gafisa (GFSA3.SA) slipped 7.79 percent to 25.56 reais, Cyrela (CYRE3.SA) lost 4.91 percent to 21.30 reais and Rossi Residencial (RSID3.SA) shed 6.22 percent to 11.30 reais.

Changes in yields on Brazilian interest futures contracts <0#DIJ:> were mixed, with lower-term contracts dipping.

Minutes from last week's meeting of central bank policymakers are slated for release on Thursday. Investors will scour the document, looking for clues as to when the policymakers will tighten monetary policy. (Reporting by Luciana Lopez; Editing by Kenneth Barry)