SAO PAULO: Latin American stocks posted their biggest intraday tumble in more than three weeks on Monday after China's government cut growth estimates for this year and other data showed the euro region economy may be falling back into recession.
The MSCI Latin American stock index posted its first decline in three sessions, dropping 1.38 percent to 4,256.85. The index has remained largely rangebound between the 4,200 and 4,300 levels since mid-February.
Worries over global economic growth weighed on equities after China's Premier Wen Jiabao cut his country's growth target to an eight-year low of 7.5 percent from 8 percent previously in a bid to guard against inflation.
China is Brazil's biggest trading partner and the No. 1 destination for Latin American commodity exports such as iron ore, soy and copper.
"The fact that he reduced the goal shows that China is dealing with a slowdown, so for our markets, which are very linked to commodities, it's not good news," said Alessandra Ribeiro, a senior economist with Tendencias Consultoria in Sao Paulo.
Concerns that the euro zone may be facing its second recession in three years further eroded risk appetite, after Markit's Eurozone Composite PMI, which gauges manufacturing and service company activity, slipped below 50 in February, denoting a contraction.
Latin American stocks are up nearly 20 percent this year as foreign investors have poured money into the region looking for higher returns, though a worsening debt crisis in Europe may temper that type of risk-taking, analysts say.
"(If Latin America) continues to receive large inflows, there is a threat of overheating and asset price bubbles," Capital Economics' David Rees warned in a note to investors on Monday. "Most at risk of overheated growth are Brazil and Colombia, while the Mexican equity market is already looking expensive."
Mexico's IPC index fell for the first session in three, dropping 0.19 percent to 38,254.91 and retreating from an over one-year high notched on Friday.
America Movil, the telecommunications firm controlled by billionaire Carlos Slim, led declines in the index, while retailer Wal-Mart Mexico slid 0.65 percent.
Brazil's benchmark Bovespa stock index notched its biggest intraday loss in a week, dropping 1.02 percent to 67,093.78 as its relative strength index retreated from Friday's "overbought" levels.
Preferred shares of mining giant Vale drove losses in the index, falling 1.7 percent, while those of state-controlled oil company Petrobras dropped 0.99 percent.
Brazilian meatpacker JBS, the world's largest processor of animal protein, gained 3.1 percent after announcing that Henrique Meirelles, former president of Brazil's central bank, took over as chairman of the holding company that controls the firm.
Chile's IPSA index posted its biggest intraday decline in over five weeks, losing 0.57 percent to 4,528.78.
Retailer Falabella drove the index lower, falling 1.12 percent, while industrial conglomerate Copec slipped 0.91 percent.
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