EMERGING MARKETS-Brazilian stocks still irked by "fiscal cliff"
* Fiscal cliff continues to vex investors * Brazil Bovespa loses 1.1 pct, Mexico IPC flat * Brazil electric utilities sector still ruffled By Roberta Vilas Boas and Gabriel Stargardter SAO PAULO/MEXICO CITY, Dec 4 (Reuters) - After trading flat for most of the day, Brazilian stocks fell more than one percent on Tuesday as fears surrounding the U.S. "fiscal cliff" continued to worry investors in the region's largest economy. Mexico's IPC index remained little changed, while Chile's bourse saw it's biggest drop in a week. Brazil's benchmark Bovespa index, which relies heavily on commodities producers, fell 1.1 percent to 57,563.23, as Monday's weak U.S. manufacturing data and sluggish budget talks stoked concerns about the global economy. Investors worry the United States could slip into recession if $600 billion in tax hikes and spending cuts start taking effect in January. The White House and Congress have failed to agree on a long-term deficit reduction plan. In an interview with Bloomberg Television, President Barack Obama rejected a Republican proposal to resolve the crisis as "still out of balance." "The Bovespa was moving in the opposite direction to external markets at the start of the day," said Luiz Gustavo Pereira, a strategist at the Futura brokerage in Sao Paulo. "Sales fell off after Barack Obama's fiscal cliff declarations." The Bovespa saw an early rally in the homebuilders sector with shares in PDG Realty SA, Gafisa SA and MRV Engenharia SA all rising after Finance Minister Guido Mantega announced a new tax break on Tuesday, in a move aimed at spurring a sluggish economic recovery. But the rally was short-lived. PDG Realty SA ended the day down 1.9 percent. Gafisa SA lost 3.61 percent, while MRV Engenharia SA fell 1.02 percent. The big winner was MMX Mineracao, the mining company owned by Brazilian billionaire Eike Batista, which rose 6.18 percent after the company's directors approved a 1.4 billion reais ($662 million) share issuance to strengthen the company's capital structure and increase iron ore output. "MMX shareholders should eventually benefit from a more balanced capital structure," Barclays analysts said in a note, although they warned the transaction would "be highly dilutive." Brazil's goal of cutting electricity rates by a fifth suffered a setback as several utilities rejected President Dilma Rousseff's offer to renew expiring hydro concessions early in exchange for power rate cuts. The refusals were led by Cia Energetica de Minas Gerais and Cia Energetica de Sao Paulo, public-private utilities controlled by the Brazilian state governments of Minas Gerais and Sao Paulo. Shares in Cia Energetica de Minas Gerais fell by 0.53 percent, while Cia Energetica de Sao Paulo lost 8.69 percent. Federal government-controlled Eletrobras, Latin America's largest utility, accepted the renewals Monday and saw its share price fall 1.87 percent on Tuesday. Company shares are trading at some of their lowest levels in more than a decade. Mexico's IPC index was little changed at 42,337.82. Banking group Banorte rose 2.9 percent, driving gains, while telecommunications giant America Movil lost 0.79 percent. Chile's IPSA index dropped 0.35 percent as retailer Falabella slipped 1.4 percent, and fertilizer, lithium and iodine producer Soquimich lost 1.07 percent. Latin America's key stock indexes at 2128 GMT: Stock indexes % change Latest MSCI LatAm 3,575.72 -0.66 Brazil Bovespa 57,563.23 -1.1 Mexico IPC 42,337.82 0.03 Chile IPSA 4,144.06 -0.35 Chile IGPA 20,341.77 -0.21 Argentina MerVal 2,458.95 1.62 Colombia IGBC 14,303.70 0.25 Peru IGRA 20,260.81 -0.15 Venezuela IBC 409,852.72 0.52
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