Oct. 6 (Bloomberg) -- Brazilian stocks plunged the most in a decade as commodity producers dropped on concern the economic slowdown and global credit crisis are worsening. Trading was halted twice because of the decline.

Usinas Siderurgicas de Minas Gerais SA and Cia. Siderurgica Nacional SA sank more than 15 percent after UBS AG stripped the steelmakers of their ``buy'' ratings. Cia. Vale do Rio Doce fell the most ever as UBS cut its 2009 profit estimate by 32 percent. Petroleo Brasileiro SA dropped the most this decade as crude oil prices fell below $90 a barrel for the first time since February. Rossi Residencial SA fell the most on the Bovespa after Goldman Sachs Group Inc. downgraded the homebuilding industry on concern that funding will slow.

``You certainly have big declines in commodity prices, which is negative for terms of trade, and you have concerns about a substantial decline in global growth,'' said Greg Lesko, who helps oversee $900 million at Deltec Asset Management Corp. in New York. ``You clearly have liquidation going on. It's all markets, it's everywhere.''

The Bovespa fell 12 percent to 39,184.23 at 12:49 p.m. New York time. The index dropped as much as 16 percent, the most since September 1998. Brazil's real fell to the lowest level in almost two years.

Stocks tumbled around the world. The MSCI Emerging Markets Index slumped 10 percent, putting it on pace for the biggest slide in its 21-year history. Mexico's Bolsa slid 6.4 percent and Chile's Ipsa dropped 6.6 percent.

Steelmakers Drop

Usiminas fell 16 percent to 28.86 reais. CSN paced declines for steelmakers, dropping 21 percent to 28.07 reais. Brazil's second- and third-biggest steelmakers were lowered to ``neutral'' from ``buy'' at UBS.

Vale sank 15 percent to 24.70 reais and earlier retreated 19 percent for the steepest intraday loss since at least January 1994. Iron ore prices may fall 15 percent in 2009, compared with an earlier estimate for a 10 percent increase, UBS said. In 2010, iron ore may fall another 15 percent, the firm said.

UBS also lowered its price forecasts for copper, aluminum and most bulk commodities amid concern a slowing global economy will hurt demand from builders and automakers.

UBS pared its forecasts ``on the back of the deterioration in demand fundamentals experienced over the past quarter and the likelihood that this could continue over the next 12 months at least,'' analysts led by Daniel Brebner wrote in a report today.

Petrobras fell 11 percent to 27.70 reais. Crude oil for November delivery slid as much as 5.6 percent to $88.60 a barrel in New York.

Scarce Funding

Rossi Residencial fell 26 percent to 3.43 reais after Goldman Sachs cut the homebuilding industry to ``neutral'' from ``attractive.''

``The global financial crisis will slow Brazilian homebuilding, in our view, as funding becomes more scarce and expensive, and consumers turn cautious in taking on debt and drawing down savings, particularly if property values take a hit,'' analysts including Jason B. Mollin wrote in a note to clients today.

In Mexico, Grupo Mexico SAB, the country's biggest mining company, fell to the lowest price in two years after UBS AG reduced its estimates for profit and the share price, citing a prolonged strike. Plastics-maker Mexichem SAB, which announced last week it was suspending a share sale and will instead issue debt, dropped 19 percent, the most in the Bolsa index. Grupo Simec SAB, a unit of Mexico's biggest steelmaker, dropped the most in three years after UBS said prices of the metal may fall.

Grupo Mexico fell 16 percent to 8.21 pesos. Mexichem dropped 19 percent to 15.20 pesos. Simec declined 11 percent to 27.70 pesos.

To contact the reporter on this story: Alexander Ragir in Rio de Janeiro at aragir@bloomberg.net.

Last Updated: October 6, 2008 13:04 EDT