By Carla Mozee
A slide in prices of natural resources pressured
commodity-related equities across Latin America on Monday, sending
benchmarks in Brazil and Mexico lower after last week's losses.
But Brazilian stocks pared losses in the late stage of the
session after Moody's Investors Service said it may boost Brazil's
ratings to investment grade.
In Sao Paulo, the Bovespa fell 0.6% to 50,622.47, with a sag in
shares in the commodity-rich market. The index fell 1.1% in the
week end July 3.
The metals group, which makes up nearly 30% of the Bovespa
index, fell 1%. Stock in Vale (RIO), the world's largest supplier
of iron ore, fell 1.8%. Steel producer Companhia Siderurgica
National (SID) fell 1.3%, and Gerdau (GGB) dropped 1.7%.
Shares of heavyweight state-run oil firm Petroleo Brasileiro
(PBR) dropped 2.2%, as crude-oil prices fell 4% to $64.05 a
barrel.
Oil prices slumped as worries about the pace of economic
recovery were heightened by remarks by U.S. Vice President Joe
Biden that administration officials "misread how bad the economy
was" when the stimulus package was being crafted earlier this
year.
The "recent feeling with [oil] investors is that demand is
simply not there," said Bruce Zaro, chief technical analyst at
Delta Global Advisors. "The market had assumed that the demand,
with the economy, would pick up for all petroleum products. The
market got ahead of itself."
Before the end of the trading session, Moody's said it will
review its Ba1 foreign- and local-currency government bond ratings
on Brazil for possible upgrade, stemming from the economy's
"demonstrated resilience to shocks over the past year," a key
characteristic needed for an investment-grade rating.
The current rating stands one notch below investment grade. The
country already has investment-grade status from Fitch Ratings and
Standard & Poor's.
The agency said although the country's gross domestic product is
expected to shrink this year, and its fiscal accounts are expected
to deteriorate compared with previous years, Brazil's overall
performance has "exceeded initial expectations" relative to a
number of other countries that carry similar or higher sovereign
ratings.
Mexico's IPC index declined 1.3% to 23,742, with shares of
copper miner Grupo Mexico down 2.9% as copper prices fell nearly
3%, and metals miner Industrias Penoles lost 2.6%.
The Reuters/Jefferies CRB Index (CRB), a gauge of commodity
prices, fell 2.3%.
Mexican stocks were also lower after President Felipe Calderon's
ruling party lost majority control of the lower house of Congress
in Sunday's elections, raising the prospect that his party will
have a harder time passing its reform proposals.
The IPC fell 1.7% last week.
Argentina's Merval slumped 1.4% on Monday, but was off session
lows. Locally traded shares of Petroleo Brasileiro fell 4.2% and
shares of steel tube maker Tenaris (TS) fell 3.1%. The Merval rose
1.1% last week.
Chile's IPSA slipped 0.2% to 3,109.
Earlier Monday, Chile's central bank said its Imacec
economic-activity gauge shrank 4.4% in May. Analysts surveyed by
Dow Jones Newswires had expected a decline of 4.5%.
The Imacec survey, which tracks 90% of Chile's gross domestic
product, fell 4.6% in the April.