EMERGING MARKETS-Brazil drags LatAm stocks down on 'cliff' fears

Thu Dec 27, 2012 4:56pm EST

* U.S. lawmakers return to budget discussions
    * Petrobras weighs on Brazil's Bovespa
    * Bovespa falls 0.89 pct, Mexico's IPC flat

    By Asher Levine
    SAO PAULO, Dec 27 (Reuters) - Brazil's Bovespa stock index
fell on Thursday as investors remained cautious over U.S. budget
negotiations, while low holiday trading volumes contributed to
volatility.
    State-controlled oil company Petrobras weighed on
Brazil's benchmark Bovespa index, while gains for
Mexican financial companies failed to significantly lift the IPC
, which ended the day flat.
    Risk appetite was limited as U.S. President Barack Obama
returned to Washington on Thursday morning to try to revive
negotiations to avert the "fiscal cliff" of automatic tax hikes
and spending cuts that could throw the U.S. economy into
recession. 
    Concerns among traders mounted later on Thursday after U.S.
Senate Majority Leader Harry Reid said, in a speech on the
Senate floor, that the U.S. economy is poised to go over the
cliff. 
    "The market is still undefined due to the United States, so
many investors are choosing to be a bit more defensive in the
last sessions of the year," said Joao Pedro Brugger, an analyst
with Leme Investimentos in Florianopolis, Brazil.
    Brugger said low trading volume due to year-end holidays
contributed to greater-than-usual volatility. 
    Brazil's Bovespa whipsawed throughout the day before ending 
down 0.89 percent at 60,415.95 points. 
    Shares of oil giant Petroleo Brasileiro SA, known as
Petrobras, slipped 3.24 percent and ranked as the biggest
contributor to the index's losses. 
    Brugger said investors' jitters over the company's future
revenue stream are preventing the stock from advancing further,
despite government pledges to increase fuel prices next year.
    Mexico's IPC index dipped 0.06 percent to 43,469.89.
    Lender Grupo Financiero Banorte rose 0.4
percent, while shares of conglomerate Alfa added 0.81
percent, driving gains. 
    Chile's bourse fell slightly, losing 0.15 percent to
4,294.50. 
    
    Latin America's key stock indexes at 1532 GMT:
    
 Stock indexes                                    % change
                              Latest              
                                                          
 MSCI LatAm                          3,782.91        -0.23
                                                  
 Brazil Bovespa                     60,415.95        -0.89
                                                  
 Mexico IPC                         43,469.89        -0.06
                                                  
 Chile IPSA                          4,294.50        -0.15
                                                  
 Chile IGPA                         21,027.51        -0.06
                                                  
 Argentina MerVal                    2,839.14         0.39
                                                  
 Colombia IGBC                      14,709.30         0.83
                                                  
 Peru IGRA                          20,377.63         0.11
                                                  
 Venezuela IBC                     467,732.75          0.5
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