Brazilian shares drop

Brazilian stocks closed down on Friday but off the day's lows as weak US data fuelled worries about the global economy and dented appetite for riskier emerging market assets. The benchmark Bovespa index fell 0.72 percent to 56,638 after closing at its highest point in more than a year on Thursday.
The losses mirrored those on Wall Street, where the Dow Jones industrial average dropped after preliminary August data showing weakened US consumer sentiment hurt hopes for a sustained recovery in the world's largest economy. Brazil's currency, the real, weakened 1.3 percent to 1.856 reais per US dollar. Investors were also booking profits on the index's strong run in the past month - it has gained almost 17 percent since the close of July 14.
Shares of state-controlled energy giant Petrobras shed 0.43 percent to 32.35 reais as crude oil fell 4.27 percent, pressured by the downbeat US data. The 19-commodity Reuters-Jefferies index sank 2.79 percent. That influenced the Bovespa index, which includes a number of companies tied to commodities. Petrobras and Vale have the heaviest weighting in the Bovespa index. Itau Unibanco, previously Latin America's largest bank by assets, lost 1.53 percent to 33.40 reais, extending a three-day losing streak. The bank reported disappointing second-quarter results this week on the back of increased provisions for bad debt.
BM&FBovespa, the world's fourth-largest exchange operator by market value, shed 2.09 percent to 12.18 reais. The company's second-quarter profit came in below expectations as trading volumes for stocks and derivatives fell. Investors booked profits on Brazil's biggest airline, TAM, which plunged 6.69 percent to 24.40 reais.
TAM's second-quarter net income more than doubled as fuel costs slumped. The stock had gained almost 28 percent since early July. Brazilian interest rate futures contracts largely slid. Investors expect the central bank to keep the benchmark interest rate, the Selic, at its current record low 8.75 percent as long as the end of 2010. The yield on the contract due January 2011 slipped to 9.61 percent from 9.71 percent. The yield on the contract due January 2012 declined to 10.88 percent from 10.97 percent. Both were among the day's most highly traded contracts.