Brazil stocks slump

Brazilian stocks notched their lowest close in more than three months on Friday, as fears about the health of the euro zone gripped markets world-wide. Riskier assets, including stocks, got dumped as European policy makers scrambled to reassure markets about the stability of the 16-nation currency bloc.
Speculation has increased that heavily-indebted Greece, Portugal and Spain may not be able to handle the demands of remaining in the euro zone. "There's a chain reaction right now," said Raffi Dokuzian of Banif Corretora. "There's a lot of feeling of instability."
The benchmark Bovespa index shed 1.83 percent to 62,762.70, on top of a 4.73 percent plunge on Thursday. It was the Bovespa's lowest close since November 3. European shares fell for a third day and registered their biggest weekly decline in 11 months.
Stocks in the United States managed to close higher, after recovering from a drop of more than 1 percent earlier. US jobs data showed the unemployment rate fell to a five-month low of 9.7 percent in January. But the data was mixed, with the United States unexpectedly shedding 20,000 jobs in January.
The Bovespa saw a short-lived bounce on the US data, but retreated quickly. "There's not a lot of consistency in the recovery," said Luiz Nunes, director of Claritas Wealth Management, noting that inconsistency can feed volatility. Brazil's currency, the real, weakened 0.42 percent to 1.891 per dollar, a day after falling 2.1 percent in its biggest one-day drop since December 17.
Heavyweights Vale and Petrobras helped drag down the Bovespa index. State-controlled energy giant Petrobras shed 2.41 percent to 31.52 reais as crude oil plunged 2.67 percent. Mining company Vale, the world's largest producer of iron ore, fell 1.09 percent to 40.80 reais.
Shares of Multiplus SA, which manages the mileage program for Brazil's largest airline, TAM Linhas Aereas, lost 0.94 percent to 15.85 reais in their first day of trade. The stock is not part of the Bovespa index. TAM edged up 0.71 percent to 32.80 reais.
Yields on Brazilian interest rate futures contracts broadly retreated after edging higher in the morning, as fiscal fears abroad trumped inflation data in Latin America's largest economy. While January inflation in Brazil quickened to 0.75 percent, the jitters over the global economy led investors to pare bets on a rate hike in Brazil.
The yield on the contract due January 2011 ticked down to 10.22 percent from 10.25 percent. The yield on the contract due January 2012 traded at 11.47 percent from 11.53 percent. Both were among the most active contracts of the day.
The central bank's inflation target for 2010 is 4.5 percent, plus or minus 2 percentage points. Last week policy makers held the benchmark rate, the Selic, at a record low 8.75 percent. The bank's monetary policy committee next meets on March 16 and 17.