Brazil stocks fall on profit-taking; Mexico up

Latin American stocks were
mixed on Friday, as optimism in Mexico and Chile over the
impact of Europe’s ban on short-selling of financial stocks
were offset by concern over weak homebuilding profits in
Brazil.

 The MSCI Latin America stock index .MILA00000PUS rose 0.4
percent, on track for a fourth straight session of gains, as
data showed U.S. retail sales rose in July at the fastest pace
in four months.

 But in Brazil, a mix of growing risk aversion, political
turmoil and economic woes have triggered massive sell-offs in
the equity market over the past month. Sentiment weakened on
Friday as weak earnings reports from homebuilders fanned
worries over the state of Latin America’s largest economy.

 The benchmark Bovespa stock index .BVSP fell 0.7 percent
to 52,842.58, the first negative opening in four sessions. Five
out of the top ten decliners in the index were homebuilders —
some of which reported earnings late on Thursday.

 “Certainly the numbers did not help sentiment at all,” said
Guilherme Sand, who helps oversee 700 million reais ($435
million) in stocks for Solidus Corretora in Porto Alegre,
Brazil.

 Stocks have whipsawed through the week as analysts worry
the United States — the world’s biggest economy — could slip
back into recession. Continued weakness in the euro zone, where
Italy and Spain risk contagion from a sovereign debt crisis,
hasn’t helped, either.

 The Bovespa has especially limped this year, with investors
scared that inflation and other local factors will eat into
economic expansion.

 Friday’s decline was led by a a 4 percent tumble in shares
of PDG Realty (PDGR3.SA), the country’s biggest homebuilder.
The company is expected to report flat earnings on Sunday.

 Among other stocks falling in Sao Paulo were rival real
estate developers Gafisa (GFSA3.SA) and Rossi Residencial
(RSID3.SA).

 Heavyweight state-controlled energy company Petrobras
(PETR4.SA) advanced 0.5 percent, limiting the Bovespa’s
declines.

 Mexico’s IPC index .MXX rose 0.5 percent, the second day
of gains.

 Chile’s IPSA index .IPSA rose for a fourth straight day,
adding 0.9 percent.

 The IPSA is being pushed up by shares of Chilean airline
LAN LAN.SN, which opened up over 5 percent a day after a
Brazilian ministry recommended the approval of its merger with
Brazilian rival TAM (TAMM4.SA). [ID:nN1E77B0CE]

 “Were seeing more foreign inflows,” Mabel Weber, senior
analyst with BICE Inversiones in Santiago. She sees volatility
continuing, but expects the IPSA to trade up next week as local
companies are seen announcing positive second quarter
earnings.