October 6, 2008 / 4:37 PM / 9 years ago

Brazil currency, stocks sink, halting trade twice

BRASILIA, Oct 6 (Reuters) - Brazil's currency sank and stocks plummeted by as much as 15 percent at one point on Monday, forcing the stock exchange to halt trade twice as a deepening financial crisis battered markets across the globe.

The latest scare came over the weekend when moves by European governments to rescue large banks and protect ordinary depositors triggered widespread concerns over the fate of the world economy.

The Bovespa index .BVSP of the Sao Paulo Stock Exchange plunged near a two-year low and traded down 15 percent when trade was stopped a second time.

The index pared losses after trading was resumed and was down 11 percent at 39,606.79 points. The Bovespa had its worst weekly performance since July 2002 last week.

"I don't know what to say, I don't know what's happening," said Zeina Latif, an economist at ING in Sao Paulo. "This is panic."

Brazil's stock market has not suspended trading twice in the same day since January 1999, when the country let its currency float freely against the dollar.

The turmoil prompted BM&F Bovespa, which operates the stock market, to set a limit for the decline in the index to 20 percent on Monday. If the index reaches that level, trading will be halted until 4:30 p.m. local time (1930 GMT).

The domestic currency, the real BRBY, dropped 4.7 percent to 2.147 per dollar as investors shunned riskier emerging market assets. The central bank said it will offer $2.1 billion in dollar swaps on Monday to help quench a surge in demand for the U.S. currency in the foreign exchange market.

The last time the bank sold dollar swaps was May 2006.

Commodity stocks were the worst hit on fears a global financial crisis will hurt demand for metals and oil. Crude prices fell to 8-month lows below $90 a barrel while copper prices fell more than 6 percent.

Petrobras (PETR4.SA) sank 9.7 percent to 28.00 reais and mining company Vale (VALE5.SA) dropped 12 percent to 25.40 reais. Steelmaker CSN (CSNA3.SA) plunged 19.5 percent to 28.74 reais.

Banks also took a thumping, with Banco Bradesco (BBDC4.SA) falling 10 percent to 24.62 reais, Banco Itau ITAU4.SA tumbling 10.8 percent to 24.85 reais and Unibanco UBBR11.SA slumping 11.4 percent to 14.45 reais.

The losses tracked those on major stock markets, with U.S. equities plunging and the key pan-European share index had its worst one-day percentage fall on record.

The fallout comes even as the U.S. Congress approved a $700 billion rescue plan last week aimed at taking the world's largest economy out of its doldrums.

The European Union pledged on Monday to protect people's savings and maintain financial stability while Washington urged a more coordinated approach to the worst banking crisis in nearly 80 years.

Top Brazilian officials have remained confident the country can weather the financial crisis, but have repeatedly said they are ready to act if it hits Latin America's largest economy.

On Sunday, President Luiz Inacio Lula da Silva said he would take the discussion of measures aimed at minimizing the impact of the crisis to Congress.

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