Fears over U.S. economy batter Brazil stocks, real

(Recasts to late afternoon, changes dateline, previous SAO PAULO)

By Ana Nicolaci da Costa

BRASILIA, Oct 2 (Reuters) - Brazil's stocks plunged on Thursday and the currency fell past the 2-per-dollar mark for the first time in a year as investors fretted over bleak U.S. economic data and the fate of a $700 billion bailout plan.

Brazil's Bovespa index .BVSP tumbled 9.1 percent to 45,242.00 points after rising in the two previous sessions. The drop helped take this year's stock losses to 29 percent.

The real BRBY plunged nearly 6 percent to 2.04 per dollar from 1.925 on Wednesday, a threshold it has not crossed since Aug. 29, 2007. The dollar reached a 13-month high globally against a basket of major currencies. .DXY

A global credit crisis has rattled financial markets, threatening industry and jobs worldwide and putting pressure on the U.S. Congress to approve a $700 billion bailout for the U.S. financial sector. But some fear the market will not settle even if the rescue plan is approved.

"Approve and life continues; don't approve and the crisis deepens," said Zeina Latif, economist at ING bank in Sao Paulo. "The market will lack price reference for a good amount of time, and this means high volatility."

Among the bigger decliners were commodity stocks, which fell along with oil and metal prices. Investors are worried that a slowing global economy will weaken demand for metals and oil from top consumers -- a prospect which has overshadowed trade in the stocks of oil giant (PETR4.SA: Quote, Profile, Research) and miner Vale (VALE5.SA: Quote, Profile, Research).

Vale was down 10.2 percent at 29.35 reais, while state-run Petrobras fell 10 percent to 31.39 reais.