Brazilian stocks fall on rekindled Europe worries
LOS ANGELES (MarketWatch) -- Brazilian stocks fell Friday, with the trading week ending on renewed worries about Europe's fiscal crisis.
Brazil's Ibovespa (BVSP) fell 2.1% to 54,194.79, breaking a three-session winning streak. The index closed the week down 0.3%.
Home building stocks dropped nearly 5% and steel stocks were dragged almost 4% lower. Home builder Gafisa (GFA) fell 7.3% and PDG Realty (PDGRY) fell 2.6%. Steel producer Gerdau (GGB) lost 2.9% and Vale (VALE) slumped 1.8%.
In addition to European concerns, investors keeping watch on data from Latin America's second-largest economy received a report Friday showing mid-month consumer prices in Brazil rose by a faster-than-expected rate.
Stocks also fell in the U.S. on fresh concerns about Europe, pushing the S&P 500 Index (SPX) down 0.9% and the Dow Jones Industrial Average (DJIA) down 121 points. The Spanish region of Valencia filed for financial aid from the country's bailout fund, and the move spurred fears that Spain as a whole will be forced to seek a sovereign bailout because of its debt load.
Spain's IBEX 35 stock index (IBEX) stumbled nearly 6% and Spanish bonds dropped, sending the 10-year bond yield (10YR_ESP) soaring. Read about Friday's action in European bonds.
Uncertainty surrounding the resolution of Europe's long-running debt and fiscal crisis has prompted companies worldwide to curb spending, impacting global growth prospects. The impact of the crisis is among the factors that have led analysts to cut, on average, their 2012 forecasts for Brazilian growth to 1.9%. The International Monetary Fund also cut its 2012 GDP forecast for Brazil, to 2.5% from 3%. IMF cuts growth view on Brazil for 2012.
The economy expanded by 2.7% in 2011, slower than the 7.5% rate in 2010.
Brazil's central bank earlier this month cut its key interest rate to a record low of 8% in a move to help bolster growth. Minutes from the recent meeting indicated policy makers were set to continue cutting the key rate, which has been brought down from 12.5% since last August.
But worries about inflationary pressures perked up Friday. The IBGE statistics agency said Brazilian consumer prices through the first half of July rose 0.33%, higher than the consensus estimate of a rise of 0.18%. Prices were up 0.18% through mid-June.
"The strong rise in agricultural commodity prices will likely pressure inflation ahead," economists at Itaú BBA said Friday. "The chances of inflation staying above 5% this year are increasing."
Inflation on a 12-month basis through mid-July is 5.24%.
Earlier Friday, Mexico's central bank held the key interest rate at 4.5%, where it's been since July 2009. Mexico's IPC (IPC) stock index finished 0.1% higher at 40,808.73 after swinging between small gains and losses during the day.
Shares of cement maker Cemex (CX) (CEMEXCPO) surged 5.9% after the company said higher U.S. sales helped narrowed its second-quarter loss. Read more about Cemex's results.
The IPC gained 0.8% for the week, during which the index notched record closing highs.
Chile's IPSA (IPSA) fell 0.2% to 4,384.50, but rose 0.3% for the week. Argentina's Merval (MERV) dropped 1.7% to 2,459.41 on Friday, but ended 3.3% higher for the week.
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