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EMERGING MARKETS-Mexico stocks fall sharply, Brazil rises on Vale
January 31, 2013 / 10:41 PM / 5 years ago

EMERGING MARKETS-Mexico stocks fall sharply, Brazil rises on Vale

* Femsa off record high, Modelo hit by U.S. suit
    * Vale lifted by 'buy' call, Petrobras earnings seen weak
    * Brazil Bovespa gains 0.72 pct, Mexico IPC down 1.04 pct


    By Michael O'Boyle and Asher Levine
    MEXICO CITY/SAO PAULO, Jan 31 (Reuters) - Mexican stocks
sank by the most in three months on Thursday as bottler Femsa
slipped from a record high and brewer Modelo tumbled to a seven
month low, while Brazilian stocks rose on gains in mining firm
Vale.
    Still, Mexican stocks clocked their fifth consecutive
monthly gain with shares trading around all-time highs, while
Brazil posted its first monthly loss since October.
    Foreign investors have driven Mexican shares up 10 percent
since-mid-November as surprisingly strong U.S. demand supported
Mexico's economy and investors bet the new government will be
able to push key economic reforms through a divided Congress.
    Yet, traders are leery that stocks can keep up their strong
advance. Mexico's main IPC index shed 1.04 percent, but
still ended up 3.5 percent in January.
    "The market is looking tired," said Gerardo Roman, head of
trading at brokerage Actinver in Mexico City.
    Coca-Cola bottler and retailer Femsa slumped
3.21 percent in its biggest drop in more than six months after
Morgan Stanley cut back its recommendation on the stock to
"equal-weight" from "overweight."
    Femsa stock has more than doubled since 2011, and analysts
said the share price had gotten ahead of the company's real
growth prospects.
    Modelo, the brewer of Corona beer, fell 6.76
percent to 108.19 pesos after the U.S. Justice Department filed
a lawsuit seeking to stop Anheuser-Busch Inbev SA from
buying the half of Modelo that it does not already own.
 
    Modelo shares saw their biggest trading volume since the
deal was announced last June. Roman said the stock would likely
rebound off current levels.
    "It is still a money-making machine," he said. "It is a
super buy anywhere near 105 pesos," where the stock was trading
last June before news of the sale.
    Brazil's benchmark Bovespa stock index rose 0.72
percent as iron-ore miner Vale rose 3.78 percent,
after Bank of America Merrill Lynch raised its recommendation on
the firm's U.S.-traded shares to a "buy." 
    The Bovespa shed nearly 2 percent during the month amid
signs that Latin America's top economy is struggling to grow
even after the central bank slashed interest rates last year to
a record low.
    Fears over government intervention in the economy, energy
rationing, mediocre economic growth and high inflation have
soured many investors on Brazilian stocks, said Clodoir Vieira,
chief economist with brokerage Souza Barros in Sao Paulo.
    "February will be a very tough month. The outlook will
depend heavily on corporate results, but I think it should be
better than January," Vieira said.
    Shares of state-controlled oil company Petroleo Brasileiro
SA, known as Petrobras, slid for the fourth straight
session, losing 0.66 percent.
    The shares dropped their most in seven months in the
previous session after a fuel price rise failed to ease investor
concerns about the health of the company's finances.
    Ariovaldo dos Santos, manager of equities at brokerage
H.Commcor said Petrobras would likely post weak
earnings, due on Monday.
   "The scenario is quite volatile and will depend on the
results that will come out," he said. 
  
    Latin America's key stock indexes at 2200 GMT:
    
 Stock indexes                        daily %    YTD %
                           Latest      change   change
 MSCI LatAm                 3,937.81     0.59     3.69
                                               
 Brazil Bovespa            59,761.49     0.72    -1.95
                                               
 Mexico IPC                45,278.06    -1.04     3.60
                                               
 Chile IPSA                 4,552.40     0.24     5.84
                                               
 Chile IGPA                22,167.63     0.26     5.21
                                               
 Argentina MerVal           3,462.42    -0.22    21.31
                                               
 Colombia IGBC             14,981.55    -0.09     1.81
                                               
 Peru IGRA                 21,435.29     0.61     3.91
                                               
 Venezuela IBC            494,771.47       -0     4.95

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