NEW YORK (CNNfn) - A sharp and persistent slide in Brazilian stocks Monday underscored a negative trend in Latin markets, almost all of which ended in the red. Declines in European and U.S. markets contributed to the downward momentum.
By the close, Brazilian shares had tumbled 378 points, or 5.58 percent, to finish the day at 6,403, extending losses on concerns that a protracted standoff between the federal government and a leading state could undermine austerity measures, traders said.
The market has been plagued by the persistent worries after Minas Gerais state last Wednesday declared a 90-day moratorium on the $15 billion in debt owed to the central government.
"This raises concerns that companies won't be able to roll over debt, which will lead to more dollar outflows and put pressure on the economy," a trader at Solidus brokerage in Porto Alegre said. "The whole fiscal adjustment could be compromised."
Trading was light, however, as many investors stuck to the sidelines while President Fernando Henrique Cardoso continued to push his budget-cutting measures and tax hikes through congress.
Elsewhere in the region Monday, the Mexican bourse closed down amid investor caution over a new screen trading system that replaced open outcry, and a dull start to the week on international markets, traders said.
"Volume last week was very poor, and with the introduction of the BMV-Sentra (screen trading system) we can see a lot of caution over how it will work," a desk trader said.
The leading IPC share index closed down 46.35 points, or 1.27 percent, at 3,592.2 on wafer-thin volume.
"The trend is downward. All the markets are down in Europe, the Dow, as well as Brazil," a desk trader said.
Peruvian shares also drifted somewhat, dipping 11.05 points, or 0.80 percent, to close the day at 1,361.94.
And in Chile, stocks fell 2.64 percent points to 3,556.65.
The stock exchanges in Venezuela and Colombia were closed for public holidays.
-- from staff and wire reports