MSN Money 

MSN Money

Colombia (AP) - Colombia's small stock market was hammered for a second day on Tuesday. closing down 8.7 percent. one day after a record slide of 10.5 percent. Other Latin American markets also took a beating as investors spooked by rising global interest rates pulled money out of emerging markets.
After shedding 9.7 percent in early trading. Colombia's benchmark stock index recovered slightly to close at 6.160.25. The fall came despite a government estimate of 5.8 percent year-to-year gross domestic product growth in the first quarter.
It was the third-largest slide in the brief history of the index. which was created in 2001 with the merger of three regional markets. The index has lost 25 percent so far this year after more than doubling last year and rising 87 percent in 2004.
Traders said investors in emerging markets are concerned accelerating inflation will lead the U.S. Federal Reserve to raise rates. making risky assets less attractive than U.S. fixed-income assets. High energy prices and other costs are forcing central banks around the globe to raise rates in a bid to counteract inflationary pressure.
The Colombian exchange. according to the stock market regulator citing the latest available figures.
The government announced Tuesday it will eliminate capital controls imposed in 2004 under which foreign investors could move only profits out of Colombia. while the principal had to remain in the country for at least a year. Heavy fines were imposed on investors who tried to skirt the rules.
The benchmark IPC index of the 35 most-traded companies fell 333.12 points. its lowest level since Nov. 18. 2004. The IPC has shed nearly 24 percent of its value since the last record-high close of 21.823 on May 9.
"What's happening in global markets and here in Mexico is concern about how far the Fed is going to raise rates." said Miguel Olavarri. head equity trader at Accival in Mexico City. noting that the market is already looking beyond a likely U.S. rate hike later this month.
A close presidential race in Mexico. with a local newspaper poll published Thursday showing leftist candidate Andres Manuel Lopez Obrador retaking the lead. is also making the market nervous.
Brazilian share prices closed sharply lower. with the benchmark Ibovespa stocks index off 2.11 percent at 32.455 points.
Argentine stocks finished lower after a roller-coaster session that was briefly buoyed by a rally by market heavyweight Tenaris. The benchmark Merval Index slid 0.98 percent to a six-month low of 1. played catch-up with the rest of the region's slide following Monday's market holiday. Chile's 40-share benchmark Ipsa index ended at 1. down 4.4 percent from Friday's close.





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