By Carla Mozee

Four sessions of consecutive advances by Latin American equities came to an end Thursday as investors sifted through another round of poor economic data from the U.S. and took gains off the table.

Mexico's IPC fell 3% to 19,537.05, zapping its 2.7% rise on Wednesday.

Brazil's Bovespa fell 1.5% to 39,638.42, a day after a 3.9% surge.

On Wall Street, the Dow Jones Industrial Average (DJI) dropped 2.7% and the S&P 500 Index (SPX) fell 3.3%.

Regional stocks were hammered as their U.S. counterparts suffered from fresh layoff announcements. Coffee retailer Starbucks Corp. (SBUX) and Eastman Kodak Corp. (EK) were among the companies that said they will cut thousands of jobs in a bid to reduce costs to help offset the impact of the economic recession.

Separately, the U.S. Labor Department said continuing jobless claims rose by 159,000 last week to a seasonally adjusted 4.78 million, the most since the government began keeping track in 1967. Also, new claims for state unemployment benefits rose by 3,000 last week to 588,000.

The numbers come in advance of the much-anticipated January jobs report, due on Feb. 6. Economists polled by MarketWatch expect a loss of 524,000 jobs.

"The chilly economic climate and dicey credit conditions have sunk demand for business equipment and big-ticket consumer goods," said Sal Guatieri, a senior economist at BMO Capital Markets, in a note Thursday.

The fresh wave of dismal figures wasn't good news for Mexico, which exports more than 80% of its products to its northern neighbor. Mexico's central bank this week forecast an economic contraction in 2009 as demand from the U.S. weakens.

Minutes released Thursday in Brazil from the Jan. 21 meeting of interest-rate policymakers show that their worry about the risks to economic growth, more than concern about inflationary pressures, likely led to the 5-3 vote to slash they key interest rate by a percentage point to 12.75%.

Policymakers also said further interest-rate cuts could be made as expectations fade for an uptick in inflation. The central bank will next meet in March.

Meanwhile, Moody's Investors Service said it may review Brazil's Ba1 foreign-debt rating by mid-year and that it will monitor the country's ability to pay debt as regional economic conditions worsen, according to a Bloomberg News report.

The country's deficit in balance of payments is one of the agency's concerns, according to the report.

Separately, Brazil's Treasury said Thursday that its debt-financing needs for 2009 amount to 379.7 billion reals ($165.4 billion), down from last year's requirement of 400.6 billion reals.

Mexico sinks

In trading, shares of Mexican consumer durable companies, retailers and manufacturers were all dragged lower.

Home builders led decliners, with shares of Urbi down 9.6% and Homex (HXM) down 7.4%.

Shares of Wal-Mart de Mexico (WMMVY) slumped 3.2% and industrial conglomerate Alfa lost 8.2%.

Stock in Grupo Banorte shed 3.8% after the banking firm said its fourth-quarter profit fell 24% to 1.27 billion Mexican pesos ($89.41 million).

Stock in Cemex (CX) declined 7.6% ahead of an expected tumble in the cement maker's fourth-quarter results. On Wednesday, its shares climbed 5.5% after the company said it completed debt renegotiations with its lenders.

Utilities and home builder Gafisa (GFA) were among the only advancers in Sao Paulo. Gafisa shares rose 1.8%. Shares of electricity provider Cemig (CIG) rose 0.7%, and Eletrobras edged up 0.2%.

Steel stocks were under pressure after UBS Pactual cut its earnings estimate for Latin American steelmakers, citing its expectation for domestic prices declines in Brazil and downward volume revisions for 2009 and 2010.

"We believe steel stocks have hit bottom after a substantial de-rating from peak valuation levels by mid-2008," said UBS Pactual in a research note. "Looking forward, we do not see fundamentals supporting a strong re-rating of the sector."

The broker also said it continues to like buy-rated Gerdau (GGB) "due to its more attractive growth potential and exposure to infrastructure." Gerdau shares finished 1.1% lower, while CSN (SID) lost 2.6%.

But Usiminas shares rose 5.4%, outperforming their rivals following Japanese steel maker Nippon Steel Corp.'s decision to purchase a 5.9% stake in Usiminas from Vale (RIO). Vale shares closed down 2.7%.

Shares of Argentine steel-tube maker Tenaris (TS) fell 2.7%, contributing to a 1.3% decline for the Merval index to 1,086.06.

Late Wednesday, the government reached a deal with local banks that renegotiates the terms of more than 15 billion Argentinean pesos ($4.3 billon) worth of debt. President Cristina Fernandez de Kirchner reportedly called the 97% acceptance rate of its debt-swap plan an "unprecedented success."

The government had offered holders of 60% of 15.1 billion pesos of domestic guaranteed loans to swap into five-year, tradable bonds. The notes will pay a 15.4% fixed-rate during the first year.

The move will likely generate debt-servicing savings of up to $1.5 billion in payments in 2009, said Eurasia Group on Thursday.

The risk-consultancy group wrote Thursday that while the debt-swap has "clearly improved" Argentina's financing picture, "it does little to address what promises to be one of the main challenges facing the government in 2009: the need to obtain more than $6 billion dollars to cover dollar-denominated debt obligations."

Chile's IPSA slipped 0.3% to 2,562.98, putting an end to its five-day run of gains.

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