EMERGING MARKETS-Brazil stocks extend sell-off on election outlook
SAO PAULO, Sept 30 (Reuters) - Brazilian stocks extended their slide on Tuesday, a day after posting their biggest one-day loss in over three years, as investors priced in a higher likelihood of President Dilma Rousseff winning a second term. A poll released late on Friday by research firm Datafolha showed Rousseff with 47 percent of voter support against Silva's 43 percent in a potential second-round runoff. Another poll released just before the market close on Monday showed Rousseff with 47.7 percent in the second round, against Silva's 38.7 percent. The first round of Brazil's presidential election is on Sunday. If a second round is necessary, it will be held three weeks later. Brazilian investors have been heavily critical of Rousseff's government for implementing policies that have gone against minority shareholder interests in state-run companies and a tendency to enact one-off stimulus measures rather than structural reforms. Brazil's Bovespa stock index dropped about 1 percent on Tuesday and was on track to close the session with an 11.7 percent monthly loss - the biggest monthly drop since October 2008, at the height of the global financial crisis. "Volatility should continue high until we have a clear definition of the potential winner," Bank of America analyst Felipe Hirai wrote in a client note on Tuesday. State-run companies fell further after taking a beating on Monday, with common shares of Banco do Brasil SA and electric utility Eletrobras down 6 percent and 4.2 percent, respectively. Banco do Brasil is down about 26 percent for September, and Eletrobras is down about 19 percent for the month. The broader MSCI Latin American stock index was down about 0.5 percent, with Mexican stocks little changed and Chilean shares slightly lower. The Brazilian real rebounded slightly as bargain hunters stepped in after the currency closed at its weakest level since December 2008 on Monday. "The market is taking a breather, but if the election outlook doesn't change, the dollar won't weaken (against the real) much more than this," said Reginaldo Siaca, head of currency trading at brokerage Advanced in Sao Paulo. Yields on Brazilian interest rate futures <0#DIJ:> also retreated slightly after shooting higher on Monday. Key Latin American stock indexes and currencies at 1627 GMT: Stock indexes daily % YTD % Latest change change MSCI Emerging Markets 1004.68 -0.47 0.67 MSCI LatAm 3163.06 -0.54 -0.65 Brazil Bovespa 54040.47 -1.07 4.92 Mexico IPC 44889.55 -0.02 5.06 Chile IPSA 3937.31 -0.17 6.44 Chile IGPA 19222.02 -0.09 5.46 Argentina MerVal 12557.119 -0.28 132.93 Colombia IGBC 13658.33 -0.43 4.49 Peru IGRA 16272.16 -1.79 3.29 Venezuela IBC 2914.92 0.31 6.52 Currencies daily % YTD % change change Latest Brazil real 2.4541 0.04 -3.96 Mexico peso 13.429 0.54 -2.97 Chile peso 597.9 0.72 -12.01 Colombia peso 2022.54 0.12 -4.48 Peru sol 2.889 0.24 -3.32 Argentina peso 8.4725 0.09 -23.37 (interbank) Argentina peso 15.7 -0.64 -36.31 (parallel) (Reporting by Bruno Federowski and Paula Laier; Writing by Asher Levine; Editing by Leslie Adler)
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