Brazil stocks fall on weak US data, real flat

By Luciana Lopez and Guillermo Parra-Bernal

SAO PAULO, June 30 (Reuters) - Brazilian stocks fell on Tuesday, tracking declines in United States equity markets, after U.S. consumer confidence unexpectedly tumbled.

The benchmark Bovespa index .BVSP erased early gains and declined 1.2 percent to 51,526.05 points. Futures contracts for the index <0#IND:> also dropped, with the contract due Aug. 2009 down 1.1 percent.

"As the data comes out and we hear from any tips on the talks, markets will try to hone in on a direction," said Osmar Camilo, an equities analyst with Sao Paulo-based Sociedade Corretora Paulista, or Socopa. "But if data turns out bad, the Bovespa will follow the trend for sure."

The Conference Board's U.S. consumer confidence index fell in June after two straight months of gains as Americans' optimism over business and job conditions weakened.

And business activity in the U.S. Midwest contracted again in June but at a slightly less severe rate than expected. For details see [ID:nN30517712].

Brazil investors often track the U.S. market to gauge global investor confidence.

Brazil's currency, the real (BRBY), erased early gains to trade unchanged at 1.962 per dollar.

Longer term, investors are optimistic the Brazilian economy, Latin America's largest, is bouncing back rapidly thanks to a combination of interest-rate cuts and government aid. In a Reuters poll, analysts and fund managers forecast a year-end closing of 55,000 points for the Bovespa. For details see [ID:nN29355761].

The Bovespa has fallen 1.7 percent in the month but is on track to notch a sizzling 27 percent gain in the second quarter, which ends on Tuesday.

PETROBRAS FALLS

Preferred shares of state-controlled oil company Petrobras (PETR4.SA) fell 1.5 percent to 32.57 reais, erasing earlier gains, as U.S. crude oil futures CLc1 dropped 1.5 percent.

Preferred shares of Vale (VALE5.SA), the world's largest miner, fell 1 percent to 30.10 reais. Steel industry officials told Reuters on Tuesday that talks between China and big miners were deadlocked, a possible sign of the trouble for the long-running Chinese system of benchmark ore pricing. For details see [ID:nSP492237].

Petrobras and Vale have the biggest weighting in the Bovespa.

Banco Bradesco (BBDC4.SA), Brazil's second-largest private bank, fell after a report by Valor Economico on Tuesday said the bank might purchase a minority stake in Porto Seguro (PSSA3.SA), the fifth-biggest insurer in the country.

Bradesco dropped 1 percent to 28.91 reais. Common shares of Porto Seguro gained 3.4 percent to 15.30 reais.