EMERGING MARKETS-Steelmakers, builders lead LatAm stocks lower

* America Movil, Televisa drive Mexico's Bolsa down
* Investors lack conviction on direction of markets

By Guillermo Parra-Bernal and Danielle Assalve
SAO PAULO, Oct 3 (Reuters) - Latin American stocks fell on
Wednesday, led by Brazilian steelmakers, builders and banks, as
optimism faded that an Europe-led bailout of Spain and improving
U.S. economic data would prop up market sentiment.
The MSCI Latin American stock index fell for
the second day in three, shedding 0.49 percent to 3,686.95 as
mounting market volatility in Brazil clouded the outlook for the
region's equity markets. The index is likely overbought, meaning
it may soon fall, according to a technical indicator known as
Bollinger Bands.
Regional markets slipped as hopes over a solution to the
Spain debt problem and robust service sector and employment data
in the United States were offset by worries about a slowdown in
the Chinese economy. China is Brazil's biggest buyer of iron ore
and soybeans.
"There is a lack of directional conviction in the air, and
asset prices will keep struggling - there's not a single
headline or number that will tell us where markets are headed in
the region," said Caio Mesquita, who helps manage about $40
million in equities for Gradius Gestão in São Paulo.
European equities edged up and the euro steadied against the
U.S. dollar, underpinned by a belief that Spain will eventually
request financial aid, a step seen by some as needed to resolve
the euro zone's debt crisis.
In Brazil, investors are reluctant to bet on the stock
market's full recovery.
Traders and data compiled by Reuters has found foreigners
are tactically adding or shedding positions in bank, steel and
mining shares. Local investors exited the equity futures market,
but timidly reinvested the money in consumer goods shares. Both
strategies are adding volatility to the market.
Brazil's benchmark Bovespa stock index swung between
gains and losses on Wednesday. The Bovespa shed 0.7 percent to
58,829.51, the lowest level in about a month. Only 22 out of the
index's 69 stocks rose.
"What would be a clear catalyst to the Brazilian market is
future growth, but we don't see such optimism doing its job
here," Flávio Barros, who oversees about $180 million in stocks
at Grau Gestão de Ativos in São Paulo.
Preferred shares of mining giant Vale led
declines, after falling 1.2 percent. The stock is trading at 6.4
times expected earnings this year, above comparable peers facing
lesser revenue and political risks, fund managers said.
Steelmakers CSN and Gerdau dropped 1.8
percent and 0.8 percent, respectively. According to analysts,
gains in those shares during the third quarter were overdone and
might be reversed in the coming weeks.
"Steel, minerals are likely to remain punished with all this
uncertainty," Mesquita said.
Petrobras' preferred shares shed 0.9 percent,
while homebuilders tumbled led by Gafisa. Analysts at Barclays
on Wednesday slashed price targets and estimates for some
companies in the industry, citing still-high cost overheads,
slow sales and stubborn inventory reduction.
Shares of TIM Participações fell for a second
day, even after the company denied a report by news magazine
Veja saying Brazil's No. 2 wireless carrier faced an
investigation by U.S. and local regulators.
Giving a boost to the MSCI Latin America, Chile's blue-chip
IPSA index gained 0.06 percent as shares of LAN Airlines
rose 0.8 percent.
Mexico's IPC index fell 0.3 percent as America Móvil
advanced. America Movil, the
telecommunications company owned by the world's richest man
Carlos Slim, dropped 0.9 percent, and broadcaster Televisa
slipped 0.6 percent.
Latin America's key stock indexes at 1500 GMT:
Stock indexes daily % YTD %
Latest change change
MSCI LatAm 3,678.55 -0.72 2.86

Brazil Bovespa 58,796.87 -0.72 3.60

Mexico IPC 40,999.96 -0.48 10.58

Chile IPSA 4,250.62 0.12 1.75

Chile IGPA 20,649.31 0.11 2.58

Argentina MerVal 2,448.58 -0.65 -0.57

Colombia IGBC 14,129.08 -0.58 11.55

Peru IGRA 21,637.93 -0.17 11.12

Venezuela IBC 344,591.22 1.05 194.43