Brazil's stocks fell to their lowest level in eight weeks on Friday as a slump in US equity markets sapped demand for riskier emerging market securities. The Sao Paulo Stock Exchange's benchmark Bovespa index dropped 2.97 percent to 64,613.79 points, its lowest level since April 29.
Expectations of profit warnings from US financial firms and lower dividends pushed Wall Street stocks lower, with the Dow Jones industrials dropping 1.83 percent and the Nasdaq Composite Index tumbling 2.27 percent. The declines increased investors' risk aversion and pushed Brazil markets lower. "There is only difficult news today," said Americo Reisner, a trader at the Fator brokerage in Sao Paulo.
Interest rate futures on the BM&F commodities and futures exchange in Sao Paulo edged higher after partial wholesale inflation data showed prices quickened in the second preview of the IGP-M index. In the stock market, mining company Vale -Bovespa's second-most-heavily weighted stock- fell 4 percent to 46.75 reais as investors sold off Brazil's most liquid stocks.
State-run oil company Petrobras declined 1.75 percent to 43.13 reais. Shares of Brazil's two biggest airlines, TAM Linhas Aereas and Gol Linhas Aereas, tumbled after Fitch Ratings downgraded Gol and said it may cut TAM.
Gol Linhas Aereas, Brazil's second-largest airline, sank 6.93 percent to 20.28 reais, while bigger rival TAM Linhas Aereas tumbled 3.49 percent to 32.05 reais. Fitch Ratings cut Gol's bond ratings to BB from BB+ and put TAM's BB ratings on negative watch, meaning it may soon downgrade it.
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