LATIN AMERICAN MARKETS: Brazil, Mexico Head Toward May Losses

By Carla Mozee

Latin American stock markets fell Friday, with the last day of trading in May marked by fresh worries about Europe's fiscal conditions with a downgrade of Spain's sovereign-debt ratings.

The indexes tracking the largest regional equity markets were set to log monthly declines, with the losses underscoring investor fears that debt-troubled nations in Europe, including Greece, Spain and Portugal, will derail worldwide economic recovery efforts.

The fears were spurred again Friday after Fitch Ratings cut its rating on Spain to AA+ from AAA, citing concern that the country's growth rate will be hurt as Spain moves to reduce its debt load.

Brazil's Bovespa is facing a loss of more than 8% in May, its worst monthly decline since nearly 25% slide in October 2008. Mexico's IPC is off about 3%, its worst performance since January. Argentina's Merval has tumbled about 9%, the sharpest decline since October 2008, and Chile's IPSA has slipped more than 1%.

On Friday in Sao Paulo, the Bovespa fell 0.4% to 61,845, as finance, home building, utility and steel stocks slumped. Decliners included home builder Gafisa (GFA) and PDG Realty, down 1.3% and 1.6%, respectively. Iron ore giant Vale (RIO) fell 0.5%, while steel producer Gerdau (GGB) managed to pick up 0.5%.

Also lower were shares of Vivo Participacoes (VIV), down 2.8%. The largest wireless services provider in Brazil is in the middle of a battle between its parent companies for full control of Vivo. Bloomberg News reported Friday that Portugal Telecom (PT) is talking to investors about launching a potential counterbid for Telefonica's (TEF) 50% stake in Vivo.

But shares of market heavyweight Petrobras (PBR) traded 0.9% higher. Still, investor uncertainty about a major capitalization plan involving the oil company and the Brazilian government has left its preferred shares down about 24% in May.