EMERGING MARKETS-Brazil stocks fall to 9-month low as rate hikes eyed

Wed Apr 17, 2013 6:56pm EDT

Related Topics

* Volume jumps as Bovespa falls to key support
    * Brazil seen starting interest rate hike cycle
    * Brazil Bovespa falls 2.05 pct, Mexico IPC down 1.42 pct


    MEXICO CITY, April 17 (Reuters) - Brazilian stocks dropped
to their lowest level in nearly nine months on Wednesday, hurt
by expectations the country's central bank would start raising
interest rates while the economy is still on shaky ground.
    Concerns over global economic growth also drove down shares
in Brazil's commodities exporters, while Mexican stocks hit an
almost one-month low.
    Brazil's Bovespa index shed 2.05 percent to
52,881.96, its lowest close since late last July, on heavy
volume. The index bounced off a key support level in intraday
trade around 52,500.
    A drop of more than 1 percent in the coming session would
take prices to their lowest in 18 months. A break lower on heavy
volume could point to a further slump, or bargain hunters might
jump in after the Bovespa tumbled more than 13 percent this
year.
    Brazil's central bank was expected to raise its benchmark
interest rate from a record low of 7.25 percent later on
Wednesday as high inflation threatens to sabotage a weak
recovery in Latin America's largest economy. 
    "If the bank starts raising rates today, it will negatively
affect homebuilders and the consumption sector and could
possibly help banks," said Luis Gustavo Pereira, a strategist
with Futura Corretora in Sao Paulo.
    Pereira added that investors will monitor the expiration of
options on index futures, due at the end of the session.
    "Foreign investors are very short on the index. If we see a
lot of them rolling over their positions, it could mean more
downward pressure on the index going forward," he said.
    Homebuilder PDG Realty shed 5.4 percent while its
rival Gafisa SA lost nearly 6 percent.
    Further hurting sentiment, the International Monetary Fund
on Tuesday trimmed projections for global growth for this year
and next, adding to investor jitters caused by
weaker-than-expected Chinese growth data on Monday.
 
    State-run oil company Petroleo Brasileiro SA,
known as Petrobras, shed 2.99 percent.
    Shares of oil company OGX Petroleo e Gas Participacoes SA
 dropped 10.71 percent after the company, which has
struggled to meet production targets, said on Tuesday that
output at its offshore oil wells fell in March. 
    Mexico's IPC index fell for the third session in
four, losing 1.42 percent to 42,610.91, its lowest since March
12.
    Shares of mining firm Grupo Mexico lost 5.08
percent to their lowest price since early December.
    Mexican stocks began April by climbing back toward a record
high seen in January. The IPC stock index has now fallen 4
percent in the last four sessions and is trading just above its
200-day simple moving average, where it found support during a
sell-off in March.
    Chile's IPSA index fell 0.41 percent as shares of
retailer Falabella lost 0.78 percent. The IPSA recently
rebounded off its lowest since last December.
        
    Latin America's key stock indexes at 2200 GMT:
 Stock indexes                         daily   YTD %
                       Latest              %  change
                                      change  
 MSCI LatAm                 3,659.92   -1.81   -3.63
                                              
 Brazil Bovespa            52,881.96   -2.05  -13.24
                                              
 Mexico IPC                42,610.91   -1.42   -2.51
                                              
 Chile IPSA                 4,243.43   -0.41   -1.35
                                              
 Chile IGPA                20,878.62   -0.44   -0.91
                                              
 Argentina MerVal           3,425.03   -1.39   20.00
                                              
 Colombia IGBC             13,296.38   -0.68   -9.65
                                              
 Peru IGRA                 17,915.72   -3.09  -13.15
                                              
 Venezuela IBC            641,807.81       0   36.14
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A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

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