Latin American stocks fell sharply Thursday on concerns that a global economic slowdown may be imminent despite the US Senate's passage of the US$700-billion bank rescue package.

Sao Paulo's Ibovespa index led losses in afternoon trading, slumping 6.2 per cent to 46,709. Argentina's Merval dropped 4.9 per cent to 1,528 and Colombia's IGBC slipped 0.5 per cent to 9,248.

Chile's IPSA was down 2.8 per cent to 2,699 and Mexico's IPC index fell 3.5 per cent to 24,229.

The trading marked a reversal from a day earlier, when stocks across Latin America made slight gains.

Sceptical traders

Traders are sceptical about the bailout's ultimate impact on a faltering global economy. Latin America's commodity-heavy economies could be particularly hard hit if worldwide demand for the region's raw materials falls.

Hernan Somervile, president of the Chilean Bank Association, said Senate approval of the bailout package has helped eliminate some volatility from markets that were slammed Monday after a defeat in the US House of Representatives.

But he said Chile and the rest of Latin America are sure to face slower economic growth amid lower worldwide demand for exports of products like Chilean copper, Brazilian soy and iron ore and Argentine meat.

"We are going to grow less as a result of the international situation," Somerville said. The crisis may affect the prices of our commodities. But this shouldn't mean a paralysis."

- AP

Taken from the Financial Gleaner, Friday October 3, 2008.