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Latin America stocks slip on drop in US confidence

Latin America stocks slip on drop in US confidence

Latin American stocks fell on Tuesday as worse-than-expected consumer confidence in the U.S. helped fuel a decline in commodity prices and raised fears of a slower rebound in demand for exports in the region's top trading partner.
Brazil's Ibovespa index fell 1.3 percent to 51,465, a four-day low. Shares in state-run oil company Petroleo Brasileiro SA lost 1.8 percent and miner Vale SA dropped 1.5 percent as world prices for oil and metal declined. The two companies make up nearly a third of the index.
Brazil's currency gained 0.3 percent to top 1.96 reals to the U.S. dollar. The currency has recovered 30 percent of its value since its more than three-year low in December and is now about 10 percent overvalued, RBC Capital Markets said in a report.
Still, $207 billion in foreign reserves, a healthy banking system, investment grade status for its debt and relatively diverse trade ties ensures Brazil's place as a "star" among the world's biggest emerging markets, the report said.
The global economic crisis "has failed to materially dent either Brazil's fundamental outlook or curb investors appetite for Brazilian risk," RBC concluded. "Brazil can remain a rising EM star at least for another one to two years."
Mexico's benchmark IPC index meanwhile slipped 0.4 percent to 24,368, a three-day low. Shares in cement maker Cemex SAB fell 2.5 percent, while media company TV Azteca SA gained 2.1 percent. The two companies comprise 5 percent of the index.
The peso was largely unchanged at 13.18 to the dollar as the government reported a 10 billion peso ($750 million) deficit for the first five months of the year. Stimulus and other public spending rose 13 percent from the same period in 2008, while public income fell 6.9 percent amid the country's slide into recession.
"Both consumer spending and business investment will remain depressed through 2009, putting the onus for growth on the public sector, which is only going to be of limited effectiveness," RBC Capital Markets said in a separate report.
Mexico, which relies on the United States to buy about 80 percent of its exports, is facing the "double-shock" of the U.S. downturn and April's swine flu outbreak, which shuttered business across Mexico, RBC said.
Its economy shrank by 8.2 percent in the first quarter and is expected to contract by 5.6 percent this year before rebounding with 2.6 percent growth in 2010, RBC said.
Elsewhere in Latin America, Chile's IPSA slipped 0.3 percent to 3,094 and Argentina's Merval fell less than 0.1 percent to 1,588. Colombia's IGBC index rose 0.8 percent to 9,880.
Latin American stocks have been pounded by the world economic crisis, which slashed demand for the commodity exports on which many of the region's biggest companies rely. Yet regional markets have bested gains in the U.S. since March as investors bet that the worst of the crisis was over, reviving appetites for risk and raw materials.
U.S. stocks fell Tuesday on an unexpected decline in consumer confidence in June, reversing gains seen in April and May, according to the private research group that tracks the indicator. Consumer spending is considered key to economic recovery.
The Dow Jones Industrial Average shed 1 percent to 8,447 in New York.


Updated : 2021-03-02 01:16 GMT+08:00