Brazil stocks slide on uncertainty, real weaker
SAO PAULO, Oct 28 (Reuters) - Brazilian stocks continued their slide on Wednesday as investors, uncertain about the sustainability of a global economic rebound, proved wary near the end of the month.
The benchmark Bovespa index .BVSP fell 1.13 percent to 62,444.81 in early trading, despite a brief stint in positive territory. The index sank almost 3 percent on Tuesday as investors saw lower consumer confidence numbers in the United States as a chance to book profits on strong gains in the index year-to-date.
Brazil's currency, the real (BRBY), weakened 0.06 percent to 1.74 per dollar on Wednesday in choppy trading, as the greenback strengthened against a basket of major currencies .DXY on risk aversion.
"We've had a large sell-off in risk over the last couple days," said Steven Butler, head of FX trading at Scotia Capital in Toronto.
"The market is still treading a bit lightly," he said, particularly as the end of the month approaches. "We're in a bit of a corrective mode right now. The way things are shaping up this morning, I wouldn't be surprised to see stocks eventually making a little bit of a recovery."
Stocks in the United States also proved anemic, as U.S. durable goods orders in September rose in line with market expectations, not enough to jolt the Dow Jones industrial average .DJI out of its doldrums. [ID:nN28294560]
Leading losses in the Bovespa index were heavyweight mining company Vale and Brazilian steelmakers.
Vale (VALE5.SA), the world's largest steelmaker, shed 1.64 percent to 39 reais. The company is slated to report third-quarter results after the bell on Wednesday. Analysts contacted by Reuters expect the company to report a 70 percent drop in profit over the previous year.
Steelmakers had recently surged in Brazil on the expectations of not only an economic recovery but also a construction boom tied to upcoming mega-events: Brazil will host the 2014 World Cup soccer tournament, and Rio de Janeiro will host the 2016 Olympics.
Gerdau (GGBR4.SA) lost 3.93 percent to 26.42 reais, Usiminas (USIM5.SA) declined 2.66 percent to 47.55 reais and CSN (CSNA3.SA) fell 2.56 percent to 58.27 reais.
Homebuilders, which had seen similar gains on hopes of a new government program to spur the construction of low-income housing, slid as well.
Gafisa (GFSA3.SA) slipped 3.96 percent to 26.41 reais, Cyrela (CYRE3.SA) lost 3.21 percent to 21.68 reais and Rossi Residencial (RSID3.SA) shed 3.73 percent to 11.60 reais.
Yields on Brazilian interest futures contracts <0#DIJ:> largely remained flat or slipped.
The yield on the contract due January 2011 DIJF1 inched to 10.21 percent from 10.23 percent. The yield on the contract due July 2010 DIJN0 remained at 9.07 percent.
The two were among the most highly-traded contracts of the morning. Investors use the contracts to bet on trends in the country's benchmark interest rate, the Selic, currently at a record-low 8.75 percent.
Minutes from last week's meeting of central bank policymakers are slated for release on Thursday. Investors will scour the document, looking for clues as to when the policymakers will tighten monetary policy. (Reporting by Luciana Lopez, Editing by Chizu Nomiyama)
