Wall Street weighs on Brazil stocks, real down

Tue Jan 20, 2009 10:55am EST
SAO PAULO, Jan 20 (Reuters) - Brazilian stocks fell on Tuesday as a downbeat open on Wall Street poured cold water over early gains, while the national currency eased against the U.S. dollar which rallied against other major currencies.
The Bovespa index .BVSP of the Sao Paulo stock exchange fell 0.39 percent to 38,676.77 points, with major U.S. stock indexes tumbling on mounting worries over grim earnings and the health of the banking sector.
Heavyweight commodity stocks led losses with mining giant Vale (VALE5.SA) down 0.49 percent to 26.26 reais.
Aracruz (ARCZ6.SA)(ARA.N), the world's top producer of bleached eucalyptus pulp, sagged 9.06 percent to 2.41 reais on concerns about an agreement with a group of banks to restructure $2.61 billion of foreign exchange contracts increased its debt. See [ID:nN20400641].
Aracruz also said industry peer Votorantim Celulose e Papel (VCP) agreed to pay 2.7 billion reais ($1.16 billion) to double its stake in Aracruz to 56 percent. Votorantim (VCPA4.SA) lost 0.37 percent to 16.10 reais.
The Votorantim stake purchase and plans to combine the two companies were announced in August, but were put on hold after Aracruz disclosed massive losses on currency derivatives.
Brazil's real BRBY lost 1.5 percent to 2.368 per dollar, as the U.S. dollar rallied to its strongest level against a basket of currencies .DXY since early December.
Interest rate futures <0#dij:> were broadly lower one day before Brazil's central bank is expected to cut rates by at least 50 basis points from 13.75 percent currently.
(Reporting by Renato Andrade, Editing by Chizu Nomiyama)