Brazil stocks tumble as US bailout plan fails

September 30th, 2008 - 11:35 am ICT by IANS  

Sao Paulo/Rio de Janeiro, Sep 30 (DPA) For the first time in close to a decade the Brazilian stock exchange in Sao Paulo had to suspend activities for half an hour Monday, after its Bovespa index crashed 10.6 percent.Trading was temporarily halted at 2.49 p.m., following news that the US House of Representatives rejected a $700 billion bailout plan to rescue the economy from the brink of financial meltdown.

When trading resumed, share prices continued to fall, dipping as low as 13 percent. A second suspension - potentially for an hour, as established for cases in which the slide touched 15 percent - was avoided. At closing, stocks were down 9.36 percent.

Meanwhile, in Mexico City, the IPC index lost 6.4 percent and Argentina’s Merval index dropped 8.7 percent.

The previous suspension of trading at the Brazilian stock exchange took place Jan 14, 1999, in the middle of a foreign exchange crisis that led to a major devaluation of the Brazilian real.

In this context, Brazilian President Luiz Inacio Lula da Silva called for “wisdom” among US authorities in the face of the ongoing credit crisis.

“The emerging countries, which did everything right, cannot now be victims of the casino that (the bankers) set up in the United States,” Lula said.

“It is time for the US Congress to take on the responsibility that corresponds to it. They created the problem, and that is why it is they who have to solve it,” he said.

Lula claimed that Brazil’s economy - the 10th largest in the world - would not be “contaminated” by the financial turmoil in the north.

“We are aware of the seriousness of the crisis, but we are sure that exports and imports are still fine, and that our industry is still fine. We are conscious of what is happening, but we are calm,” Lula said.

Referring to Monday’s crash in Brazilian stocks, he said: “The stock exchange historically rises and falls. That is not the problem. And it is not just the Brazilian stock exchange, but stock exchanges around the world.”

Brazilian Finance Minister Guido Mantega said he believed that the US Congress would eventually pass a bail-out plan and noted that the current credit crunch had not affected the Brazilian economy.

“We have quite a solid fiscal situation, inflation is under control,” Mantega said.

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