March 20, 2012 / 10:08 PM / 6 years ago

EMERGING MARKETS-Latin America stocks fall on China worries

* Brazil stocks fall on concerns over China slowdown

* Mexico’s IPC trade suspended due to strong quake

* Commodity shares lead declines

By Guillermo Parra-Bernal

SAO PAULO, March 20 (Reuters) - Latin American stocks fell on Tuesday on worries China’s demand for raw materials is losing steam while trading was suspended in Mexico late in the session after a strong earthquake forced evacuations across the capital.

The MSCI Latin American stock index shed 1.35 percent as Brazil’s benchmark gauge edged further from an 11-month high hit last week.

An official at Mexico’s stock exchange said trading was suspended since so many banks and brokerages in the capital evacuated after the quake, which hit around noon local time. No major damage has been reported.

In Brazil, the Bovespa index fell 0.64 percent to 67,295 points. Mexico’s benchmark IPC stock index was down 0.53 percent at 38,055 points when trade was halted.

The world’s biggest iron ore producer Vale, led declines in Brazil after remarks by Australian rivals pointed to sliding iron ore demand in China.

BHP Billiton, the world’s biggest miner, foresees Chinese demand for iron ore and a key ingredient of steel, slowing to single-digit growth rates.

The comments weighed on Brazilian equities, which are very sensitive to any hint of softening demand in China - the nation’s largest single trading partner.

In addition, housing starts in the United States slipped in February, piling on to uncertainty over the extent and strength of the recovery in the U.S. economy. The market had rallied at the beginning of the year on hopes that a recuperating economy could help support a global slowdown.

“Markets in Brazil had been favorable this year but more recently local investors have grown even more worries about the disconnect between economic data and market sentiment,” said Daniel Garcia, head of retail equity trading at Corretora Souza Barros brokerage in São Paulo.

The Bovespa index is unlikely to break its next point of resistance at 69,000 soon if turmoil in global markets persists, said Luiz Borges, an analyst with Tecnica Assessoria de Mercado.

Preferred shares of Vale shed 0.83 percent. The stock, which is up 10 percent so far this year, has entered a downward trend in recent days on concern that demand in China and tax disputes in Brazil will weigh on profits, Borges said.

Steelmakers in China are Vale’s largest client. Commodities companies and exporters of raw materials currently account for about 55 percent of the Bovespa.

Oil shares fell, led by OGX Petróleo and Petrobras, likely reflecting “growing fears over demand for commodities in international markets,” said Rafael Dornaus, a trader with Hencorp Commcor in São Paulo.

Limiting the decline in the Bovespa, Brazil’s No. 2 builder, Cyrela Brazil Realty advanced 3.34 percent while Hypermarcas, the largest Brazilian producer of disposable consumer goods, gained 3.18 percent.

In Mexico, America Movil, the telecommunications company controlled by billionaire Carlos Slim, led declines with a 1.5 percent drop.

Chile’s IPSA stock index dropped 0.64 percent after hitting a seven-month high during the last session.

Shares of industrial conglomerate Copec fell 1.18 percent and Santander Chile declined 1.61 percent as investors booked profits following an eight-day rally.

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