By Carla Mozee
Major Latin American stock markets dropped Friday, with the
sell-offs in line with a slide on Wall Street as investors remain
shaken by the prospect that global economy recovery will be hurt by
Europe's debt troubles.
Brazil's Bovespa index fell 2.1% to 63,412.47. Argentina's
Merval lost 3% to 2,247.77, and Mexico's IPC gave up 1.6% to
31,812.73.
Chile's IPSA fell 0.9% to 3,839.42. Late Thursday, Chile's
central bank held its key interest rate at 0.5%, as expected, but
policy makers indicated that it's considering a rate hike.
Friday's declines didn't prevent the major stocks indexes from
posting weekly gains. The Bovespa rose 0.9% and the IPC rose 1.2%.
The Merval advanced 4.1% and the IPSA rose 0.2%.
Among exchange-traded funds, the iShares Brazil Index Fund (EWZ)
fell 2.7% on Friday, and the iShares Mexico fund (EWW) lost 2.8%.
The iShares Chile fund (ECH) gave up 2.5%.
As investors fled assets they perceive as risky, the currencies
of Brazil, Mexico and Chile dropped against the U.S. dollar.
Meanwhile, the euro hit its lowest level against the dollar since
2008. The euro's drop was sparked by a report -- that has since
been denied -- that France's president had threatened to pull his
nation out of the euro zone.
Earlier this week, the European Union and the International
Monetary Fund created a nearly $1 trillion financial-aid package
for vulnerable euro-zone nations. Greece last week approved
austerity measures, followed by steps announced this week in
Portugal and Spain.
"But, while Greece is the most profligate of EU members, it is
not alone in its predicament as markets have punished Portugal,
Italy, Ireland and Spain as well," wrote Sherry Cooper, chief
economist at BMO Capital Markets, wrote in a note distributed
Friday.
"The required fiscal contraction needed to reduce these
longer-term structural deficits will bludgeon economic activity,
exacerbating the deficit problem over the near term," she
wrote.
In Sao Paulo, Petrobras (PBR) shares shook off losses to close
up 0.3% although crude oil for June delivery tumbled 3.8% to below
$71.61 a barrel on the New York Mercantile Exchange.
The state-run oil giant is slated to release its results for the
first quarter late Friday. Earnings are expected to climb 19% to
6.93 billion reals, according to a Dow Jones Newswires poll of
analysts.
Other resource-related stocks were hit as dollar-denominated
prices for commodities fell amid strengthening in the greenback.
Brazilian steel maker Gerdau (GGB) lost 2.6% and Usiminas fell
4.5%.
In Buenos Aires, locally traded shares of Petrobras fell 3.2%.
Petrobras Energia (PZE), the Argentina-based unit of Petrobras,
dropped 2.6% and steel producer Siderar (ERAR.BA) fell 4.5%. In
Mexico City, shares of copper miner Grupo Mexico lost 1.3%.
Outside of resource-related stocks, shares of Mexican telecom
services provider Axtel fell 3.4% in the wake of a downgrade by
Fitch Ratings.
But shares of Mexican tortilla producer Gruma (GMK) were among
the few advancers in Friday's session. The shares rose 0.3%. On
Thursday, they dropped 6.6% when Venezuela took over Gruma's unit
in the country. '