Brazil stocks slump on profit-taking, real eases

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SAO PAULO, Nov 5 (Reuters) - Brazil's stock market slumped in tandem with its U.S. counterpart as worries about the world's largest economy took centre stage again after the U.S. presidential election, while the real eased against the dollar.

The Bovespa index .BVSP of the Sao Paulo stock exchange dropped 6.1 percent to 37,785.66 points after a two-day rally.

Banking stocks were especially hard-hit as investors cashed in on hefty gains made after the announcement this week that Itau (ITAU4.SA) would take over smaller rival Unibanco UBBR11.SA forming Latin America's largest financial group.

"The market seems to be more secure but since the atmosphere is in fact still worrisome, we have to be ready for profit-taking," said Zeina Latif, economist at ING.

Brazil's currency (BRBY), the real, weakened 0.3 percent to 2.12 per dollar in volatile trade.

Interest-rate futures <0#DIJ:> on the BM&F commodities and futures exchange were mixed ahead of the release on Thursday of minutes from the central bank's rate-setting meeting last week.

The central bank kept the benchmark Selic rate unchanged at a two-year high of 13.75 percent last week to avoid an economic slowdown, changing tack after four straight rate hikes.

Heavyweight commodity stocks were the biggest drag on the index on fears that a global slowdown will hurt demand for oil and metals.

State-run Petrobras (PETR4.SA) fell 3.4 percent to 24.25 reais after oil prices slumped more than 7 percent.

Mining company Vale (VALE5.SA) fell 7 percent to 25.77 reais, as prices of copper plunged 7 percent in London, bringing lower nickel, zinc and other industrial metals.

Brazilian steelmakers also declined, tracking the drop in metals prices. Gerdau (GGBR4.SA) plunged 10 percent to 13.98 reais, even after reporting a 37 percent increase in third quarter profit to 1.42 billion reais, while CSN (CSNA3.SA) plunged 12.4 percent to 26.61 reais and Usiminas (USIM5.SA) dropped 8.8 percent to 26.17 reais.

On the Sao Paulo stock market, Itau (ITAU4.SA) tumbled 8.8 percent to 25.91 reais after it surged 22 percent over two days after it announced that it would take over smaller rival Unibanco. Other financial services shares that had gained recently on expectations of more consolidation among Brazilian banks also dropped.

Unibanco UBBR11.SA fell 10.9 percent to 14.14 reais, after it shot up 54 percent over six straight sessions of gains. Bradesco (BBDC4.SA), Brazil's largest private sector bank, fell 7.6 percent to 24.97 reais.

Petrochemical company Braskem (BRKM5.SA) dropped 6.4 percent to 8.48 reais.

The company on Wednesday reported a 849 million reais net loss in the third quarter, its first quarterly loss in two years, because of massive foreign exchange losses as Brazil's currency plunged. (Reporting by Elzio Barreto and Ana Nicolaci da Costa, Editing by Chizu Nomiyama)