Brazilian stocks fell on Friday for the third consecutive session, pressured by lower US markets and concern about a local media report on alleged tax evasion by the Central Bank president, traders said.
The Sao Paulo Stock Exchange's benchmark Bovespa index closed with a 0.64 percent decline at 21,591.0 points, while the real, weakened 0.49 percent to end at 3.056 per US dollar both reversing earlier gains.
Traders said a report by IstoE, one of the country's largest weekly newsmagazines, weighed slightly on stocks and the country's currency.
But they added that the allegations were not serious enough to compromise the officials' credibility.
The report, posted online mid-afternoon on Friday, said Henrique Meirelles, the Central Bank president, and Luiz Augusto de Oliveira Candiota, the bank's director of monetary policy, failed to declare assets held overseas in their 2001 tax returns.
The Central Bank would not immediately comment on the report.
"There's no dishonesty there, maybe just an accounting mistake. They can pay a fine and move on without this scathing their credibility at all," said Marcelo Mesquita, Brazil strategist at UBS Investment Bank in Rio de Janeiro.
Gustavo Medina, a managing director at Metodo Investimentos in Sao Paulo, said: "This story helped markets slide further, working like a cold shower. But what really weighed were US bourses, which are close to yearly lows."
The Nasdaq index fluttered around its lowest level in nine months, while the Dow fell below the psychologically important mark of 10,000 points on Friday.
At the Sao Paulo Stock Exchange, shares of wireless operator Telesp Celular Participacoes managed to buck the trend and gain 1.5 percent to 8.72 reais despite releasing a wider-than-expected second-quarter loss late on Thursday.
Shares of local telephone company Brasil Telecom fell 4.9 percent to 17.41 reais, still on news that Brazil's federal police are investigating a report that the company hired Kroll Inc to spy on a government minister.
Blue-chip stock Tele Norte Leste Participacoes (Telemar) fell 1.9 percent to 38.90 reais and was among the biggest movers of the session.
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