Brazil's currency jumps, stocks fall on US rout
(Updates to close)
SAO PAULO, Oct 9 (Reuters) - Brazil's currency surged on Thursday for a second session after the central bank intervened in the foreign exchange market, while stocks extended a recent rout as shares on Wall Street slumped.
The Bovespa index .BVSP of the Sao Paulo Stock Exchange fell 3.9 percent to 37,080.30 points, extending a six-day rout when the index plunged nearly 26 percent.
Stocks in Brazil erased earlier gains as investors' mood soured because of a plunge in the United States, where the Dow Jones industrial average sank 7.3 percent and the Nasdaq Composite Index fell 5.5 percent.
Brazil's currency surged as much as 6 percent shortly after opening, a day after the central bank flooded the markets with dollars from direct sales and the auction of foreign exchange swaps.
The real (BRBY) closed nearly 4 percent stronger at 2.203 per U.S. dollar. The central bank offered dollars in the spot market in two auctions, at 2.171 reais and at 2.168 reais. It also sold $911 million in dollar swap contracts, which work like the sale of dollars in the futures market.
On Wednesday, the bank offered dollars in the spot currency markets three times, the first such sales in more than five years. It also sold $1.3 billion in swap contracts.
"Today was much calmer," said Mario Battistel, head of currency trading at the Fair brokerage. "It (the central bank) is selling dollars to the market, meeting its demand."
Interest-rate futures <0#DIJ:> on the BM&F commodities and futures exchange were mostly lower as investors bet the central bank may halt a series of rate hikes started in April in a bid to avert a slowdown in the economy.
On the stock exchange, state run energy company Petrobras (PETR4.SA), the most heavily weighted stock in the index, slumped 3.1 percent to 25.88 reais as oil prices plunged and as investors sold off Brazil's most liquid shares amid the global market turmoil.
Mining company Vale (VALE5.SA) 4.8 percent to 24.55 reais as investors sold off widely traded Brazilian companies, retreating from emerging market assets because of the rout in U.S. stocks.
Pulp producer Aracruz ARCZ6.SA sank 9.1 percent to 3.00 reais. Fitch Ratings cut Aracruz's bonds one notch to the junk rating of BB+ because of losses on currency derivatives. Fitch said in a report the currency position "exposes the company to heightened market volatility and potential further losses" if the real weakens further against the dollar.
Transportation company America Latina Logistica (ALLL11.SA) jumped 10.8 percent to 10.91 reais. The company reported late on Wednesday preliminary third-quarter data and reiterated its forecast for 12 percent to 14 percent growth in the volume of goods transported.
Credit Suisse reiterated a "buy" rating for the shares in a report, saying the market had already priced in a weak quarter and that a recent sell-off made the stock attractive. (Reporting by Elzio Barreto and Fabio Gehrke; Editing by Diane Craft)
