Banco do Brasil SA, Uniao de Bancos Brasileiros SA and Banco Bradesco SA lost more than 2 percent as higher interest rates curbed demand for consumer credit last month. Cia. Vale do Rio Doce paced a decline in raw-materials producers after Itau Corretora said a fall in prices for iron ore exported to China is ``disturbing.'' Petroleo Brasileiro SA, Brazil's state-controlled oil company, dropped the most in a week after Itau said the government is likely to raise taxes once oil production begins on existing concessions.
The Bovespa index lost 1,069.33, or 1.9 percent, to 54,780.80 at 11:17 a.m. New York time, the steepest decline since Aug. 11. The MSCI Latin America index slid 2.5 percent. Mexico's Bolsa index dropped 1.3 percent. Chile's Ipsa rose 0.5 percent.
Financial stocks dropped 3.1 percent in the MSCI Brazil index for the steepest decline among the 10 industries. State and non-state bank lending climbed to 1.086 trillion reais ($669.5 billion) last month, a 1.7 percent rise from a revised 1.068 trillion reais in June, the central bank said in a statement.
Monetary policy makers have raised benchmark interest rates three times since April, to 13 percent from a record low 11.25 percent, in a bid to cool domestic demand and inflation. The move pushed the average annual interest rate Brazilian banks charge customers to 39.4 percent in July from 38 percent in June, the central bank said.