EMERGING MARKETS-Latam stocks fall as energy fears hit Brazil

Tue Jan 8, 2013 5:47pm EST

Related Topics

* Brazil tax authority fines MMX, Natura

* Energy rationing fears push electric utilities lower

* Brazil Bovespa falls 1.3 pct, Mexico IPC down 0.12 pct

By Danielle Assalve

SAO PAULO/MEXICO CITY, Jan 8 (Reuters) - Latin American stocks fell on Tuesday as profit-taking in Mexico combined with continued worries over energy rationing in Brazil, which dragged down domestic shares of electric utilities.

Adding to Brazil's woes, potential tax fines weighed on shares of miner MMX and cosmetics firm Natura , with investors wary as earnings season arrives.

"If corporate results follow the growth of the economy in Brazil and the world, it is hard to imagine that we will have very good balance sheets ahead," said Ariovaldo Santos, equities manager at H.Commcor brokerage in Sao Paulo.

Brazil's benchmark Bovespa stock index fell for the third straight session, losing 1.3 percent to 61,127.84.

Shares of mining firm MMX Mineração e Metalicos SA , controlled by billionaire Eike Batista, fell 3.60 percent after the company said on Tuesday that it faces a potential fine of 3.758 billion reais ($1.857 billion) for overdue income taxes.

An index of electric utility shares continued to slide, losing 2.83 percent, over concerns that low water levels in reservoirs could lead to energy rationing.

President Dilma Rousseff cut short her vacation on Tuesday in order to return and deal with a crisis that threatens to undermine Brazil's fragile economic recovery. She is trying to revive an economy that likely grew less than 1 percent last year, while also keeping a lid on inflation now running above 5.7 percent.

Despite Energy Minister Edison Lobao saying late on Monday that he saw no chance of energy rationing in Brazil this year, shares of utilities such as Centrais Eletricas Brasileiras SA and Companhia Energetica de Minas Gerais fell 9.35 percent and 1.88 percent, respectively, on Tuesday.

Shares of Brazil's No. 1 cosmetics maker, Natura Cosmeticos SA, fell 4.65 percent after the company said it received two notices from Brazil's tax watchdog late on Monday challenging tax practices at the firm.

The company is unlikely to provision for the potential tax payment and may only take charges related to lawyers' fees, analysts said.

Mexico's IPC index was down slightly at 44,571.20 points as mining giant Grupo Mexico lost 2.09 percent.

Chile's IPSA index rose 0.17 percent to 4,405.94.

FILED UNDER: