EMERGING MARKETS-Latam stocks drop on Greece, profit-taking

Mon Nov 26, 2012 9:59am EST

Related Topics

* IMF, European policymakers meet to discuss Greek debt plan

* Commodities shares drop following previous week's gains

* Brazil Bovespa falls 1.37 pct, Mexico IPC edges higher

By Asher Levine and Danielle Assalve

SAO PAULO, Nov 26 (Reuters) - Latin American stocks fell on Monday, with uncertainty over the release of bailout funds for Greece fueling profit-taking after region's shares posted their biggest weekly gain in two months.

The MSCI Latin American stock index notched its biggest daily loss in over a week, dropping 0.57 percent to 3,582.81 after having rallied 2.9 percent last week.

On Monday, a technical momentum indicator known as slow stochastics flashed a "bearish cross" in overbought territory, suggesting shares may fall further in coming days.

Oil producers drove Brazil's benchmark Bovespa index to its first loss in three sessions, while Mexico's IPC index edged higher.

Shares fell as euro zone finance ministers and the International Monetary Fund meet to discuss the best way to cut Greece's heavy debt load, a prerequisite for releasing a critical bailout package to the country.

Uncertainty over the deal, along with lingering concerns over the U.S. fiscal cliff, drove investors to book profits in shares of the most widely-traded commodities firms.

"People generally think the fiscal cliff will be resolved but more and more players believe the situation in Europe will worsen before it improves," said Marcello Paixao, a partner at Principia Capital Management in Sao Paulo.

Brazil's benchmark Bovespa stock index dropped its most in over a week, losing 1.37 percent to 56,782.67.

Shares of state-controlled oil company Petrobras lost 1.7 percent after the company said on Monday that output of petroleum and natural gas fell for a fifth straight month in October compared with a year earlier.

Rival oil producer OGX Petroleo e Gas Participacoes SA , controlled by Brazilian billionaire Eike Batista, lost 4.1 percent, returning part of the over 7 percent gains it posted last week while preferred shares of iron-ore miner Vale shed 1.25 percent.

"There has been a withdrawal of Brazil stocks from Latin America-dedicated funds in recent months," Paixao added. "If not 'market weight,' Brazil is clearly 'underweight' in many portfolios due to the combination of weak corporate results and government intervention in the private sector."

Shares of Centrais Eletricas Brasileiras SA, better known as Eletrobras, rose 6 percent as investors struggled to arrive at a stable price for the stock following a recent sell-off.

Eletrobras shares plunged nearly 50 percent this month on expectation that a plan for hydro dam concession renewal and related power-rate cuts will slash revenue, profit and investment.

Still, the company plans to bid for new electricity generation and transmission rights, a source close to the company told Reuters on Monday.

Shares of state-controlled Banco do Brasil SA rose 3.4 percent after the bank said on Monday that it will sell shares in a newly-formed insurance and pension unit in a move to tap growth in a fast-growing industry.

"It's a positive thing as the insurance sector is expanding strongly in Brazil and Banco do Brasil has a large client base," said Henrique Florentino, an analyst with Um Investimentos in Sao Paulo, who highlighted the benefits of a capital injection in the company.

Mexico's IPC index edged 0.18 percent higher as a 1 percent gain by conglomerate Alfa helped offset a 0.4 percent drop in shares of telecommunications firm America Movil .

Shares of plastic pipe maker Mexichem rose 1.2 percent after the company said on Friday that shareholders had approved a dividend of 0.48 peso per share.

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