Latin American stocks fell to their lowest since September on Friday as concerns about the global economy and Europe's debt crisis pushed investors to dump riskier assets across the board. The MSCI Latin American index shed 1.41 percent and it notched its second week of steep losses. The index shed more than 3 percent this week. Stocks in Brazil, the region's biggest market, fell to their lowest since July on Friday.
Investors shunned riskier assets, moving away from commodities and higher-yielding currencies and flocking to safe-haven assets such as the dollar and US government bonds. Investors refocused on eurozone debt troubles before meetings next week by finance officials in Brussels. "What we are seeing here is risk aversion," said Juan Jose Resendiz, head of analysis at brokerage Arka in Mexico City.
Resendiz said US housing and industrial production data due next week could add to concerns that global growth may be slowing. "Industrial output data will be very important and it could undermine demand for stocks," he said. Brazil will see inflation data next Friday and it could add to worries of further interest rate hikes or other measures to try and slow growth. Risk of higher interest rates have left Brazilian stocks facing "a year of (downward) adjustments," said Julio Hegedus, chief economist with InterBolsa in Sao Paulo.
Recent heavy selling in commodities, partly fuelled by concerns that tighter interest rates in China will crimp demand from the world's second biggest economy, has also weighed on the outlook for Latin America's materials producers. "Investors are totally cautious. They're not out buying," Hegedus said.
Brazil's benchmark Bovespa stock index slid 1.2 percent to 63,235.30 points. If the index falls below 63,000 points, Hegedus said, the Bovespa could keep on falling toward 60,000. Shares of mining giant Vale, the world's largest producer of iron ore, fell 1.81 percent to close at its lowest since late September. Banks also dropped, with Itau Unibanco, Brazil's biggest private-sector bank by assets, falling 2.51 percent.
Mexico's IPC index lost 0.33 percent to 35,045.14 as industrial conglomerate Alfa 2.81 percent. Arka's Resendiz said a break much lower to 34,800 could send the index to 34,000. The outlook for Billionaire Carlo Slim's America Movil, which accounts for nearly one-quarter of the IPC, will be key. Shares in America Movil rose 0.3 percent after closing in the previous session at its lowest since March 2010.
The stock has shed about 12 percent since last month on concerns regulators could crimp its power in Mexico's mobile phone market. Chile's IPSA dipped 0.26 percent after the country's central bank surprised markets with a third aggressive rate hike on Thursday after market close. Shares of Banco Santander Chileled losses, down 0.88 percent.
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