Brazil stocks sink on uncertainty, mixed U.S. data

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SAO PAULO Oct 30 (Reuters) - Brazilian stocks tumbled on Friday, as mixed economic data in the United States worried investors about the strength and breadth of a global economic recovery and scared them off riskier emerging market assets.

Sao Paulo's Bovespa index .BVSP sank 3.41 percent to 61,545.50, just about zeroing out the index's gains for the month of October.

Friday's loss posed a stark contrast to Thursday's nearly 6-percent rally after data then showed the United States returned to growth in the third quarter.

But data on Friday suggested that the recovery in the United States, the world's largest economy, was rocky. Strong Midwest area manufacturing was balanced against a slip in consumer sentiment this month. [ID:nN30412996] [ID:nLU357472]

Investors sold off riskier emerging market assets as a result, with Brazil's currency, the real BRBY, weakening 1.4 percent to 1.756 per dollar. The greenback, considered a safe haven in times of economic uncertainty, gained against a basket of major currencies .DXY.

Shaken investors sent U.S. stocks lower, too, as the Dow Jones industrial average .DJI shed 2.5 percent.

Because the United States is the world's largest economy, its financial health affects financial decisions taken across the world.

"The biggest worry for markets today is still on what's going on abroad," said Eduardo Cotrim, Treasury desk director at Banco Modal.

At the stock market on Friday, commodity shares were the biggest weighted drags as energy and metal prices decreased.

Oil giant Petrobras (PETR4.SA) fell 2.83 percent to 35.04 reais as crude oil CLc1 settled 3.59 percent lower, pressured by the stronger dollar and the hit in consumer sentiment.

Mining company Vale (VALE5.SA), the world's largest iron ore producer, lost 4.01 percent to 39.45 reais.

Steelmakers also fell along with metal prices. Gerdau (GGBR4.SA) moved down 4.36 percent to 26.30 reais, CSN (CSNA3.SA) sank 2.67 percent to 58.30 reais and Usiminas (USIM5.SA) tumbled 2.25 percent to 46 reais.

Brazilian banks also lost. Itau Unibanco (ITUB4.SA) shed 4.64 percent to 33.50 reais, Bradesco (BBDC4.SA) declined 2.92 percent to 34.56 reais and Banco do Brazil (BBAS3.SA) shed 3.22 percent to 28.21 reais.

Brazil's Embraer (EMBR3.SA), the world's third-largest maker of commercial aircraft, plunged 10.6 percent percent to 8.94 reais after Chief Financial Officer Luiz Carlos Aguiar said the company foresees a 10 percent drop in revenue in 2010. See [ID:nN30406298].

The gloom was such that even TIM Brasil TCSL3.SA fell 11 percent to 5.5 reais despite its third-quarter results. Brazil's third-largest wireless carrier said on Friday it had turned a profit of more than $35 million in the third quarter from a loss in the year earlier period. See [ID:nN30290404]

Yields on Brazilian interest rate futures contracts <0#DIJ:> ticked higher.

Brazilian investors use the contracts to bet on trends in the country's benchmark interest rate, the Selic, currently at a record-low 8.75 percent. (Reporting by Luciana Lopez and Ana Nicolaci da Costa; Editing by Diane Craft)