MercoPress. South Atlantic News Agency

Latin American shares sink on Friday following global equity plunge

The Sunday tenth anniversary of 9/11 also added to market’s nervousness

Latin American shares sank on Friday as global equity markets plunged on fears a Greek default could hobble major European banks and deepen a global economic slowdown.

The MSCI Latin American stock index fell 3.56% in its largest one-day percentage drop since global equities tumbled in early August. Analysts said a recent rally had been derailed.

Renewed fears about Europe could end up driving the region's stocks back to their lowest since early August. Likewise unconfirmed terrorism threats against New York City and Washington ahead of the 10th anniversary of the September 11 attacks added to nervousness in markets.

Unemployment in the United States has been stuck above 9% and weak data has fanned fears of another US recession that would undermine demand for Latin America exports.

In Brazil, the benchmark Bovespa stock index dropped 3.2%, cutting back the gains made after the central bank's surprise 50 basis point interest cut late on Wednesday.

Shares of Brazil's state-run oil company Petrobras lost 2.47% and homebuilder PDG Realty shed 6.75%.

Mexico's IPC stock index dropped 2.59% to 33,812.62 points as shares of America Movil AMX.MX lost 2.49%. The index fell below a key support level at 34,000 points,which coincided with the two-thirds retracement of the IPC's August 2010 to Jauanry 2011 rally.

Chile's blue-chip IPSA index lost 2.19% as Santander Chile shed 5.24%. Local stocks were also hurt after the Chilean government sent a bill to Congress on Friday that cuts maximum rates on bank loans, a move bankers argue would hurt their business by deterring lending to riskier customers.

In Buenos Aires the Merval index was down 3.04%, in Colombia, 0.76% and in Peru, 0.86%.

Worldwide US stocks tumbled more than 2% after the top German official at the European Central Bank resigned in protest of the bank's bond-buying program, which has been a major tool in fighting the region's debt crisis.

The Dow Jones industrial average dropped 303.68 points, or 2.69% to 10,992.13. The Standard & Poor's 500 Index dropped 31.67 points, or 2.67%, to 1,154.23. The Nasdaq Composite Index dropped 61.15 points, or 2.42%, to 2,467.99.

European shares ended sharply lower on concerns US President Barack Obama's 447 billion jobs package might face hurdles in Congress and as the resignation of a top ECB official signalled a rift within the central bank.

The FTSEurofirst 300 of top European shares ended 2.6% lower at 915.52 points. It hit a two-year low last month and is down 18% this year. The Thomson Reuters Peripheral Eurozone Index fell 6.2%.

The FTSE slid 2.35%; Germany’s DAC, 4.04% and France’s CAC40, 3.6%.

Japan’s Nikkei average slipped Friday, posting a weekly loss of 2.4% and moving back towards a six-month low hit earlier in the week, after President Barack Obama's US jobs package failed to provide new buying incentives.

The benchmark Nikkei slipped 0.6 percent to 8,737.66 but was still well above Tuesday's 8,588, its lowest level since March 15 when stocks were sold off after the earthquake and tsunami.