EMERGING MARKETS-Brazil stocks drop after economy skids in November

Fri Jan 17, 2014 9:51am EST

BRASILIA, Jan 17 (Reuters) - Brazil's benchmark stock index
dropped on Friday, approaching near five-month lows after
renewed signs of economic weakness hurt shares of homebuilders.
    The Bovespa index, which tracks the most-traded
stocks on the Sao Paulo stock exchange, declined 0.5 percent.
    Chile's IPSA stock index and Mexico's IPC index were
little changed from Thursday's close.
    Economic activity in Brazil as measured by the central
bank's IBC-Br index contracted more than expected in
November despite a surge in retail sales, throwing cold water on
hopes of a modest recovery. 
    "While the economy is struggling to grow, the market thinks
the central bank will have to keep raising interest rates to
curb inflation. It's a bad outlook for homebuilders," said
Luciano Rostagno, chief strategist at Banco Mizuho.
    Shares of homebuilders Gafisa SA, PDG Realty SA
Empreendimentos e Participacoes and Brookfield
Incorporacoes SA lost between 1.8 and 2.8 percent.
    Homebuilder Tecnisa SA, which is not included in
the Bovespa index, fell 1.43 percent to 8.27 reais also due to a
high number of project cancellations in the fourth quarter.
    Options expiration on Monday could increase volatility on
Friday's session, traders said. Blue chip shares such as
state-run oil giant Petrobras and global miner Vale
 dropped 0.06 and 0.53 percent, respectively.
    * Shares of college operator Estacio Participacoes SA
 dropped 0.66 percent to 19.59 reais after the company
denied market rumors about a possible merger deal with
U.S.-based Laureate Education Inc.
    * Deutsche Bank cut its target price for U.S.-traded shares
of Gol Linhas Aereas Inteligentes SA to $8 from $10
previously. Shares of the Brazilian airline in the Bovespa
 were unchanged at 10.75 reais. 


    Key Latin American stock indexes at 1437 GMT:
    
     Stock indexes                  daily %    YTD %
                       Latest       change     change
 MSCI LatAm           3,068.43      0.07       -4.2
                                               
 Brazil Bovespa       49,468.57     -0.46      -3.96
                                               
 Mexico IPC           42,150.67     -0.05      -1.35
                                               
 Chile IPSA           3,677.10      0.11       -0.60
                                               
 Chile IGPA           18,155.60     0.12       -0.39
                                               
 Argentina MerVal     5,928.26      1.62       9.97
                                               
 Colombia IGBC        12,574.11     0.18       -3.80
                                               
 Peru IGRA            16,406.03     0.52       4.14
                                               
 Venezuela IBC        2,763.89      0          1.00
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