Brazil's stocks slipped on Friday on fears of interest rate hikes at home and abroad while the currency strengthened as state-run oil giant Petrobras repatriated some foreign sales.
The Sao Paulo Stock Exchange's benchmark Bovespa index shed 1.2 percent to end at 22,415 points. The index lost about 0.5 percent this week.
"The fundamentals are good, but the uncertainty about domestic interest rates is worrying. As a result, the trend should be for the bourse to give up ground," said Francisco Andrade, partner at Perimeter Asset Management in Sao Paulo.
Among individual stocks, bellwether telephone company Tele Norte Leste Participacoes fell 1.73 percent lower at 38.55 reais, while Banco Bradesco slipped 1.4 percent to 140.50 reais.
But local shares tracked US stock markets down, and also reacted negatively to a big rise in the Fipe retail price index for Sao Paulo. That fuelled fears that Brazil's central bank will hikes its benchmark interest rate, currently at 16 percent, in the coming months.
Consumer prices in Sao Paulo, South America's biggest city, rose 0.99 percent in August after increasing 0.59 percent in July, the University of Sao Paulo's Economic Research Institute (Fipe) said on Friday.
The local real currency gained 0.41 percent to close at 2.928 per US dollar.
"We traded $20 million today for Petrobras, which looks like it is bringing in $60 million," a currency trader at a Brazilian bank said.
Despite continued inflation worries and signs that retail prices are rising, the real was supported by expectations of dollar inflows from corporate bond sales overseas. Investors are also expecting Brazil to issue a new sovereign government bond in the coming weeks.
"Demand for Brazilian debt should remain high, even if the Fed (US Federal Reserve) ups rates next month as expected," said Carlos Cintra, a fixed income trader at Banco Prosper in Rio de Janeiro.