Latin American stocks tumbled Wednesday as investors bet a steeper-than-expected plunge in U.S. retail sales signaled that a prolonged recession would further slow demand for the region's exports.
Brazil's benchmark Ibovespa stock index dropped 4 percent to 37,981, its lowest since Dec. 30, as shares in mining company Vale do Rio Doce fell 3.8 percent to 25.74 reals. State-run oil company Petroleo Brasileiro SA dipped 3.1 percent to 23.20 reals amid a 1.3 percent slide in world crude oil prices. The companies together represent 30 percent of the index.
Brazil's currency lost 2.7 percent to trade at 2.35 reals to the U.S. dollar, its weakest point this year.
Mexico's benchmark IPC index fell 3.2 percent to 20,369 on concern that the still-troubled U.S. banking system is far from easing credit for importers and consumers of Mexican goods. Mexico sends about 80 percent of its exports to the United States.
The peso slipped more than 2 percent against the U.S. dollar to its weakest since Nov. 21, as less export income entered Mexico. The Central Bank auctioned off $400 million in reserves to slow the slide, receiving bids at an exchange rate of 14.16 pesos to the dollar.
Investors worldwide were rattled by news Wednesday from the U.S. Commerce Department, which reported a 2.7 percent decline in U.S. retail sales in December, more than double the 1.2 percent drop that analysts had expected.
The record sixth-straight monthly decline suggests the U.S. recession is far from over, as mounting unemployment and a continuing credit crunch stalls growth, analysts said. The Dow Jones Industrial Average slid 2.9 percent to 8,200 in New York.
Argentina's benchmark Merval index fell 3.9 percent to 1,088, led by a 6.6 percent decline in locally traded shares of oil pipeline maker Tenaris SA, the heaviest weighted stock on the index. World crude prices dropped to about $37.28 a barrel on Wednesday.
Chile's IPSA meanwhile slid 0.8 percent to 2,451, while Colombia's IGBC index fell 1.8 percent to 7,611 and Peru's IGBVL fell 1.9 percent to 6,929.
Latin American equities have been battered by the world economic crisis, which has slashed demand for the region's commodity exports, including oil, copper and iron ore, and pushed foreign investors to dump local assets to cover losses at home.
Associated Press writer Jeannette Neumann in Buenos Aires, Argentina, contributed to this report.