Brazilian stocks, currency fall on global worries

(Updates to close)

SAO PAULO, Feb 4 (BestGrowthStock) – Brazilian stocks logged their
weakest day of the year so far on Thursday, following global
stocks lower, as sovereign concerns about the euro zone led
investors to dump riskier assets.

The benchmark Bovespa index (.BVSP: ) plunged 4.73 percent to
63,934.01, its biggest drop since shedding 4.75 percent on Oct.
28, 2009, on concerns about the global economic recovery.

Worries that Greece, Spain and Portugal might prove to be
weak links in the euro zone rippled beyond Europe, prompting
investors on Thursday to send global stock markets lower.

“That sort of thing worries people,” said Joao Medeiros, a
partner at Pioneer Corretora in Sao Paulo, Brazil’s largest
currency brokerage. “The market in Brazil is very linked to
risk appetite.”

Stocks fell across the world. European shares fell by the
most in 10 weeks on Thursday. For more see [ID:nLDE6131SI].

Equities in the United States ended down nearly 3 percent,
pressured by an unexpected rise in jobless claims ahead of key
payroll data slated for release on Friday. [.N]

Brazil’s currency, the real (BRBY: ), weakened 2.1 percent,
its biggest one-day drop since Dec. 17, to 1.883 to the U.S.
dollar, which is viewed as a safe haven in times of economic
turmoil. The greenback gained 0.75 percent against a basket of
major currencies (.DXY: ) on Thursday.

Commodities also took a hit, with the Reuters-Jefferies
index (.CRB: ) slumping 2.55 percent.

The Bovespa index includes a number of stocks tied to the
trade in raw materials, including heavyweights Vale and
Petrobras, which led losses.

Mining company Vale (VALE5.SA: ), the world’s largest
producer of iron ore, sank 5.22 percent to 41.25 reais.

State-controlled energy giant Petrobras (PETR4.SA: )
plummeted 5.11 percent to 32.30 reais as crude oil (CLc1: )
settled down around 5 percent, its biggest drop since July.
[ID:nN0489680]

Steelmakers fell, too. Usiminas (USIM5.SA: ) shed 3.88
percent to 48.25 reais, Gerdau (GGBR4.SA: ) slumped 4.67 percent
to 25.29 and CSN (CSNA3.SA: ) lost 4.18 percent to 54.61.

YIELDS TUMBLE

Yields on Brazilian interest rate futures contracts
(0#DIJ:: ) fell after comments from the country’s central bank
led investors to see a rate increase as more likely in April
than March, putting off a tightening cycle slightly.

Minutes from the bank’s Jan. 26 and 27 rate-setting
meeting, released on Thursday, dampened expectations of a rise
in March, analysts said. Brazil’s economic recovery could fuel
inflationary pressures, central bank policy makers said in the
minutes released on Thursday. [ID:nN04199018]

“The minutes are in line with a hike in April,” said Arthur
Carvalho, chief economist with brokerage Ativa.

The yield on the contract due January 2011 (DIJF1: ) slid to
10.27 percent from 10.35 percent. The yield on the contract due
July 2010 (DIJN0: ) edged to 9.13 percent from 9.18 percent.

Both were among the most active contracts of the day.

Policymakers “are signaling that the time to raise rates is
getting near,” said Newton Rosa, chief economist with
SulAmerica Investimentos.

But, Rosa added, policymakers remained noncommittal on
exactly when any increases could come.

“Inflation expectations will set the tone,” he added.

Policy-makers use an inflation target — set in 2010 at 4.5
percent, plus or minus 2 percentage points — as a guide in
setting rates.

Last week the central bank held the country’s benchmark
interest rate, the Selic, at a record-low 8.75 percent.

Stock Investing

(Reporting by Luciana Lopez; Additional reporting by Paula
Laier; Editing by James Dalgleish)

Brazilian stocks, currency fall on global worries