LATIN AMERICAN MARKETS: Brazil, Mexico Stocks End May Trading In The Red

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 as Spain's sovereign-debt rating was downgraded.

The indexes tracking the largest regional equity markets finished in the red for the month, with losses underscoring investor fears that debt-troubled nations in Europe, including Greece, Spain and Portugal, will derail worldwide economic recovery efforts.

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

Brazil's Bovespa fell 8.3% in May, its worst monthly decline since a nearly 25% slide in October 2008. Mexico's IPC dropped 3.5%, its biggest decline since January.

Argentina's Merval tumbled 8.2%, the sharpest decline since October 2008 when the index sank 37%. Chile's IPSA fell 1.4%.

On Friday in Sao Paulo, the Bovespa fell 0.2% to 61,946.99, as finance, home building, utility stocks slumped. Decliners included home builders Gafisa (GFA) and PDG Realty, down 1.7% and 1.9%, respectively. Iron ore giant Vale (RIO) fell 0.4%, while steel producer Gerdau (GGB) managed to pick up 0.7%.

Also lower were shares of Vivo Participacoes (VIV), down 3.3%. 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 1.2% higher. Still, investor uncertainty about a major capitalization plan involving the oil company and the Brazilian government has left the preferred shares down about 14% in May.

In Mexico City, the IPC index closed Friday with a loss of 1.6% at 31,547.55.The Merval slipped 0.2% to 2,199.02, but Chile's IPSA outperformed its rivals with a 0.6% rise to 3,833.91.

Among exchange-traded funds, the iShares MSCI Chile Investable Index Fund (ECH) fell 1.8% in May. The iShares MSCI Mexico Index Fund (EWW) logged a monthly loss of 7.7%, the deepest pullback since February 2009. The iShares MSCI Brazil Index Fund (EWZ) tumbled 12%, its worst showing since January.