Brazil stocks fall as U.S. jobs data spreads gloom

(Updates to close)

By Luciana Lopez

SAO PAULO, July 2 (Reuters) - Brazilian stocks fell on Thursday, as disappointing U.S. jobs data added to investor fears the world economy is still in a rut, while a sharp fall in oil prices weighed on heavyweight Petrobras.

The benchmark Bovespa index .BVSP fell 1 percent to 51,024.94 points, tracking 2.63 percent losses in the Dow Jones Industrial Average .DJI. U.S. equities fell after payrolls data showed employers slicing more jobs than expected from June payrolls. See [nN01210643].

"The U.S. economy, in a weak spot, is forcing oil down," Andre Perfeito, an economist with Sao Paulo-based Gradual Investimentos, in a phone interview.

Oil prices slumped more than 4 percent as downbeat U.S. data fueled fears that if the world economy is still struggling, so will demand for energy.

Brazil's currency, the real (BRBY), slumped 1.14 percent to 1.952 per dollar, as fears over the state of the world's largest economy dampened demand for riskier emerging market currencies.

The real has largely stayed within a range of 1.90 to 1.98 reais to the dollar over the past month, said Kathy Lien, director of currency research at GFT Forex. "The level of 1.92 pretty much has been a bottom for the past month. I think that that level will hold," she said.

At the stock market, state-controlled energy giant Petrobras (PETR4.SA) led declines in the Bovespa, falling 1.76 percent to 31.24 reais.

Preferred shares of the world's biggest iron ore producer, Vale (VALE5.SA), shed 0.23 percent 30.05 reais as copper prices lost more than 1 percent HGN9.

Also weighing on the stock, Morgan Stanley analysts reviewed their rating and price target on Vale, saying this year's rise in the stock might cool off. Brazilian exports of iron ore dropped 17 percent in June from a year earlier, the trade ministry said on Wednesday.

Petrobras and Vale are the two most heavily-weighted stocks in the index.

Steelmakers also took a hit. Usiminas (USIM5.SA) was down 3.28 percent to 41.30 reais and Gerdau (GGBR4.SA) retreated 1.21 percent to 20.34 reais.

YIELDS DOWN

Yields on interest rate futures <0#DIJ:> also fell, as the latest inflation figures reinforced expectations that the central bank could cut interest rates further. The contract due Jan. 2011 DIJF1, the most heavily-traded of the day, was down at 9.92 percent from 9.96 percent.

Data released on Thursday showed consumer prices in Sao Paulo, Brazil's biggest city, rose 0.13 percent in June over May, a deceleration from the 0.33 percent increase the month before. See [ID:nN01337405].