Brazilian stocks slide on China worries, real down

SAO PAULO, Feb 12 (BestGrowthStock) – Brazilian stocks retreated in
early trading on Friday after China surprised global markets by
moving to tighten credit further.

The benchmark Bovespa index (.BVSP: ) slid 1.27 percent to
65,288.84 after having notched gains the previous four
sessions.

China raised the level of reserves that banks must hold for
the second time this year on Friday, a sign the fast-growing
country plans to keep inflation and credit in check. For more
see [ID:nTOE61B069].

The possibility of slower growth in China sparked fears of
slower growth worldwide, as the Asian country, a voracious
consumer of commodities, has been a major force in helping
advance a global economic recovery.

“With world markets already on edge over concerns about the
fiscal health of euro zone countries, the news from China
rattled investors,” said Zeina Latif, chief Brazil economist at
ING in Sao Paulo.

The path to a global recovery will be “bumpy,” she added.

“This is healthy,” Latif said. China needs to normalize its
growth and avoid bubbles. “To me, rumblings from China are a
buy opportunity.”

Fears over heavily-indebted Greece lingered, as well. While
the European Union on Thursday tempered fears of a wider crisis
by offering words of support, concrete details were few.
[ID:nLDE61A0W2]

The global jitters helped the dollar, considered a safe
haven in times of economic uncertainty. The greenback advanced
against a basket of major currencies (.DXY: ), and the real
(BRBY: ) weakened 0.59 percent to 1.861 per dollar.

Commodities took a hit from the stronger dollar, with the
Reuters-Jefferies index (.CRB: ) down 1.18 percent.

Large stocks in the Bovespa declined, with the slump
reaching across several sectors.

Mining company Vale (VALE5.SA: ) fell 0.93 percent to 42.60
reais. Disappointing fourth-quarter results this week from
Vale, the world’s largest producer of iron ore, could prompt
some analysts to slash their stock price target for the
company. [ID:nN11129353]

State-controlled energy giant Petrobras (PETR4.SA: ), the
most heavily-weighted stock in the index, slipped 0.75 percent
to 33.11 reais as crude oil (CLc1: ) sank 2.35 percent.

Banks also pulled the index lower. Itau Unibanco
(ITUB4.SA: ), Brazil’s largest private-sector bank by assets,
lost 2.16 percent to 36.29 reais, Banco do Brasil (BBAS3.SA: ),
Latin America’s largest bank by assets, shed 1.81 percent to
30.46 reais and Bradesco (BBDC4.SA: ) moved down 1.52 percent to
31.14 reais.

Yields on Brazilian interest rate futures contracts
(0#DIJ:: ) were little changed, as investors saw more signs that
central bank chief Henrique Meirelles could stay at his post
through the end of the year, rather than stepping down to run
for public office.

The yield on the contract due January 2011 (DIJF1: ) edged to
10.26 percent from 10.27 percent. The yield on the contract due
January 2012 (DIJF2: ) inched to 11.48 percent from 11.47
percent.

Both were among the most active contracts early in the
session.

Meirelles could forgo running for a seat in the Senate,
Planning Minister Paulo Bernardo said on Friday, telling
reporters in Rio de Janeiro that President Luiz Inacio Lula da
Silva wants Meirelles to preside over the central bank until
year’s end. [ID:nN12157219]

Monday and Tuesday are holidays in Brazil, and financial
markets will be closed.

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(Reporting by Luciana Lopez; Editing by Theodore d’Afflisio)

Brazilian stocks slide on China worries, real down