Global economic woes knock Brazil stocks, real

Mon Feb 2, 2009 9:56am EST
SAO PAULO, Feb 2 (Reuters) - Brazil's stocks and currency slumped on Monday, as more economic woes abroad and worries about the state of the world economy spread gloom to markets around the globe.
Brazil's Bovespa stock index .BVSP fell 1.65 percent to 38,653.32 points as European shares slid more than 3 percent and U.S. stocks opened lower.
European stocks fell, with Barclays (BARC.L) tumbling after Moody's credit ratings agency cut the bank's long-term rating, while U.S. consumers cut spending for a sixth straight month in December.
The news at home was also downbeat, with government data showing on Monday that Brazil posted its first monthly trade deficit in nearly eight years in January, as exports plunged because of the global economic slowdown.
Energy and mining stocks were the biggest drag on the index on the expectation that slowing economic growth would weigh on global demand for oil and metals.
State-run Petrobras (PETR4.SA) fell 1.24 percent to 24.72 reais as oil prices CLc1 slumped more than 3 percent.
Mining giant Vale (VALE5.SA) fell 1.6 percent to 27.55 reais as copper prices eased.
Banking shares also fell after financial group Banco Bradesco (BBDC4.SA) announced fourth-quarter profit fell sharply as lending slowed and provision for bad debts grew.
Bradesco shed 2.74 percent to 20.23 reais, Banco do Brasil (BBAS3.SA) slumped 1.83 percent to 13.89 reais and Banco Itau (ITAU4.SA) was 2.78 percent lower at 22.71 reais.
Brazil's real currency also fell 1.73 percent to 2.354 per dollar, as the greenback gained against a basket of currencies .DXY.
Interest rate futures <0#dij:> were broadly higher even as analysts forecast even lower benchmark lending rates for the end of the year.
Analysts in a weekly central bank survey are now expecting the Selic rate will end the year at 10.75 percent, compared with 11 percent previously.
Brazil's central bank last month cut rates by a higher-than-expected 1 percentage point to 12.75 percent in a bid to revive an economy struggling with tight credit availability, sluggish demand and dwindling exports.
Central Bank President Henrique Meirelles told Reuters on Saturday that credit conditions will return to normal in Brazil within two months due to government efforts to unlock lending.
The central bank has taken a series of measures since last year to ease a liquidity crunch, including selling dollars on the spot foreign exchange market and lending to struggling Brazilian exporters.