By Carla Mozee

Most Latin American equities closed lower on Friday, largely tracking movement on Wall Street where job losses in the U.S. continued to climb last month.

Brazilian shares lost their grip on earlier gains, although anticipation grew for a big interest rate cut in the wake of poor industrial production figures. The Bovespa was down 0.7% to 37,096.74.

In Mexico, the benchmark equity index fell 1.9% to 37.105.09, with shares of Cemex SAB (CX) down 5.4%, extending losses from the prior day on concerns about the cement maker's planned issuance of bonds.

Equities in Mexico on Friday had been halted for about half an hour because of a technical problem on the exchange.

Chile's IPSA fell 1% to 2,360, while Argentina's Merval rose 1.1% to 957.10.

The indexes finished off their lows of the session as stocks on Wall Street staged a late turnaround, leaving the S&P 500 Index up 0.1% and the Dow Jones Industrial Average up 0.5%.

In Brazil, industrial production for January rose 2.3%, compared with the 12.4% decline in December, said the Brazilian Census Bureau. The January figure was considerably below the consensus estimate for a rise of 8.5%, according to Itaú Securities.

The year-over-year contraction was 17.2%, the worst showing since February 1991. In December, the on-year decline was 14.8%.

In afternoon trades, the iShares MSCI Brazil Index Fund (EWZ), an exchange-traded fund, pared losses to end down 0.2%.

The industrial production report arrived before Brazil's central bank meeting on Tuesday and Wednesday, and market professionals have held to their outlook for a cut in the Selic rate, which currently stands at 12.75%.

A Dow Jones Newswires survey of 18 analysts released Friday shows that 15 of them foresee a rate cut of 100 basis points, or a full percentage point. Such a move would match the size of the bank's rate cut in January.

Win Thin, senior currency strategist at Brown Brothers Harriman, said the risk for a larger cut is rising, and he now expects policymakers to slash the rate by 150 basis points to 11.25%. A cut of that size occurred in 2003, said Thin in a note Friday.

"While inflation remains stubbornly high, we think the focus of policy-makers is firmly on avoiding a deep downturn," he said.

Brazil's currency, the real, weakened after the report, and was off 0.3% at 2.374 versus the U.S. dollar from Thursday.

Shares of interest-rate sensitive banks were higher. Federally run Banco do Brasil rose 2%, Banco Bradesco (BBD) gained 2.3%, Unibanco (UBB) rose 1.1% and Itau (ITU) rose 1.4%.

Meanwhile, shares of Petrobras (PBR) fell 1.3%. The oil giant is slated to post fourth-quarter earnings Friday evening, and analysts expect a decline because of lower oil prices.

Analysts polled at Dow Jones Newswires currently expected net earnings of 7.69 billion reals on revenue of 52.7 billion reals. EBITDA is projected to fall to 10.6 billion.

Ahead of the report, the company said it hit a record for daily domestic oil production of 2.012 billion barrels of oil. The record, set on Wednesday, was reached largely because of activity on three new production platforms.

In other developments, Brazilian President Luis Ignacio Lula Da Silva is scheduled to meet U.S. President Barack Obama in Washington on March 14, according to the White House.

The meeting comes before Obama travels to London for the Group of 20 economic summit in London on April 2, and to Trinidad for the Summit of Americas in April, set for April 17 through 19.

Latin American stock indexes had surged earlier this week on hopes that China would bulk up its $585 billion economic stimulus plan, but losses set in afterward when China said it expects growth of 8% in 2009, signaling that it wouldn't take on further spending projects aimed at spurring activity.

For the week, the Bovespa fell 2.8%, the IPC and IPSA declined 4%, and Argentina fell 5.3%.

Earlier Friday, investors in regional markets and on Wall Street examined a report from the U.S. Labor Department that the economy lost 651,000 jobs in February, pushing the unemployment rate to its highest in more than 25 years, to 8.1%. The government also revised higher the number of losses seen in January and December.

"From an employment perspective, this is already the deepest U.S. recession since 1958 and we've yet to see the pace of job losses slow," wrote economist Benjamin Reitzes at BMO Capital Markets on Friday.

Citigroup said weakening in the Mexican economy as the U.S. languishes in recession, and the performance of the Mexican stocks have contributed to its decision to cut its year-end target for the IPC, to 20,000 points from 24,000 points.

"We also still expect an upside breakout for the region later this year, when the U.S. economy bottoms out," said Citigroup Latin American strategist Geoffrey Dennis in a note to clients. "However, we may now have to wait longer for this, most likely now until after mid-year."

Citigroup expects the Mexican economy to contract 2.4% in 2009. The IPC is down 24% from the end of year last.