EMERGING MARKETS-Brazil stocks erase early gains as CSN weighs

Tue Jan 21, 2014 1:25pm EST

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* Brazil Bovespa down 0.46 pct, Mexico IPC falls 0.16 pct


    SAO PAULO, Jan 21 (Reuters) - Brazilian stocks gave up early
gains on Tuesday, led by shares of steelmaker CSN, on concerns
the company could be forced to disburse up to $3 billion to buy
out partners in its Namisa iron ore unit.
    Mexico's IPC index fell for the third session in
four, while Chile's bourse edged lower.
    After initial gains of as much as 0.8 percent, Brazil's
benchmark Bovespa stock index was down 0.46 percent by
mid-afternoon, hitting its lowest level in over five months.
    Shares of CSN, or Companhia Siderurgica Nacional SA
, plunged over 7 percent, their biggest one-day drop
since Sept. 2012, pushing the index into negative territory.
    Local newswire Agencia Estado, citing unidentified sources
with knowledge of the situation, reported that an agreement
between CSN and a group of Asian trading companies and steel
mills over Namisa's ownership was taking longer than expected. 
    Investors are worried that CSN, which has been struggling
with weak trends in its steel and iron ore units and rising
debt, would have to compensate partners for problems with
Namisa. Itochu Corp and other partners could exercise an option
to sell their stake to CSN worth as much as $3 billion.
    CSN did not respond immediately to a request for comments. 
    Ita├║ Unibanco Holding SA, Brazil's largest
non-government bank, rose 1.7 percent, helping support the
index, while rival Banco Bradesco SA advanced 1.3
percent.
    Consumer delinquencies in Brazil fell in 2013 for the first
time in 14 years, research firm Serasa Experian said on Tuesday.
The numbers could at first glance spell a brighter outlook for
private-sector lenders, which have seen quarterly profit recover
recently thanks to prudent credit disbursement policies.
 
    Shares of state-run oil company Petroleo Brasileiro SA
, known as Petrobras, advanced for the first session
in four, rising 0.6 percent.
    "Petrobras is bouncing back with strength after recent
losses, but the stock is still dealing with the impact of
recommendations from JP Morgan and Goldman Sachs that investors
sell off emerging market assets," said Pablo Spyer, a director
with Mirae Securities in Sao Paulo.
    Petrobras shares, which due to their high liquidity tend to
attract foreign investors looking for exposure to Brazil's
market, are down 15 percent over the past three months. Part of
that flight is due to the perception that developed markets
offer better investment prospects as Brazil deals with higher
interest rates, government meddling in the private sector and
lower expectations for economic growth.
    Spyer, along with a number of local banks and brokers
including BB Investimentos and Grupo BTG Pactual, have remained
bullish on the local market, however.
    "I think the pullback in Brazil stocks is basically over,"
he said. "Brazil is at a good price. Yes, the government creates
some difficulties here, there have been a lot of interventions,
but it's all priced in now."
    Mexico's IPC index nearly erased the previous
session's gains, losing 0.16 percent to 41,907.68.
    Mining firm Grupo Mexico lost 1.8 percent,
contributing most to the index's losses, while cement
manufacturer Cemex advanced 1.5 percent.
    Chile's IPSA index gave up slight morning gains,
returning to negative territory for a second straight session.
    Retailer Falabella slipped 0.7 percent, while Banco
de Chile advanced 0.78 percent.
    
    Latin America's key stock indexes at 1811 GMT:
    
 Stock indexes          Latest          daily %   YTD %
                                        change    change
 MSCI LatAm             3,021.96        -1.06     -4.58
                                                  
 Brazil Bovespa         48,484.16       -0.46     -5.87
                                                  
 Mexico IPC             41,907.68       -0.16     -1.92
                                                  
 Chile IPSA             3,679.85        -0.19     -0.52
                                                  
 Chile IGPA             18,177.65       -0.03     -0.27
                                                  
 Argentina MerVal       5,800.99        -2        7.60
                                                  
 Colombia IGBC          12,551.36       0.06      -3.98
                                                  
 Peru IGRA              16,568.58       0.2       5.17
                                                  
 Venezuela IBC          2,808.85        0.65      -99.90
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