Nov. 18 (Bloomberg) -- Brazil’s Bovespa index fell from a 17-month high, led by the country’s biggest card-payment processors, on Banco Santander Brasil SA’s plans to enter the credit-card market and a plunge in U.S. housing starts.

Vale SA and Gerdau SA paced declines for commodity producers after housing starts fell to the lowest level since April and metal prices slumped. Cia. Brasileira de Meios de Pagamento and Redecard SA dropped more than 2 percent after Banco Santander said it’s in talks with another company to develop credit- and debit-card services. ALL America Latina Logistica SA declined 1.6 percent after Brazil’s biggest railroad operator sold 1.3 billion reais in convertible bonds.

“U.S. economic numbers that have come out haven’t been too attractive, such as housing starts, and that’s frustrated some investors’ expectations,” said Carlos Camacho, who helps manage the equivalent of $1.8 billion at GAP Asset Management in Rio de Janeiro. “Plus you have the Bovespa already with about a 10 percent gain this month, which is a pretty good return.”

The Bovespa index slid 1.3 percent to 66,515.66. Today’s decline narrowed this month’s gain to 8.1 percent. The real slipped 0.8 percent to 1.7255 per dollar. Mexico’s Bolsa index dropped 0.8 percent and Colombia’s IGBC slid 1.1 percent.

Vale dropped 2.3 percent to 42.30 reais.

Gerdau, Latin America’s biggest steelmaker, fell 1.3 percent to 28.04 reais.

Housing starts dropped by almost 11 percent to an annual rate of 529,000, the lowest since April, according to figures released today by the Commerce Department. Building permits, a sign of future construction, also declined last month, according to the government’s statistics.

Competition Concerns

Redecard, the Brazilian processor of Mastercard Inc. payments, fell 4.1 percent to 27 reais. Cielo, as the processor of Visa Inc. payments is known, dropped 5.1 percent to 15.97 reais. Cielo, whose exclusive right to handle Visa-branded transactions expires in 2010, was previously known as VisaNet.

Banco Santander said in a regulatory filing yesterday that it is in advanced talks with Campo Bom, Brazil-based Getnet Technology Capture and Processing Electronic Transactions Hua Ltda to explore and develop credit and debit card services.

“Any news about central bank regulations or the entrance of a new player in the industry has affected the companies,” said Marianna Waltz, analyst at Banco do Brasil SA in Sao Paulo. “Certainly this news, even if it’s not an established fact yet, will hurt the stock.”

“Santander could be able to extract a significant portion of the market at inception since it has approximately 5 percent of Redecard’s banking domicile and approximately 10 percent of Visanet’s,” Barclays analysts wrote in a note to clients.

The Brazilian unit of Spain’s biggest bank rose 1.7 percent to 22.70 reais.

ALL Drops

ALL fell 1.6 percent to 15.43 reais. The Curitiba, Brazil- based transporter of agricultural commodities sold 10.7 million convertible bonds, ALL said yesterday in a regulatory filing.

In Mexico, Axtel SAB rose the most in six months on speculation that a change in a foreign-ownership law could make the second-biggest phone company a takeover candidate.

Axtel added 9.2 percent to 10.85 pesos after an earlier

In Colombia, investors traded a record 1.2 trillion pesos ($614.8 million) worth of shares today, the country’s main exchange said.

Trading of Cementos Argos SA, Colombia’s biggest cement maker, accounted for 885.9 billion pesos of the total, Bolsa de Valores de Colombia SA said in an e-mailed statement.

Cementos Argos gained 2 percent to 10,240 pesos.

Carlos Quintero, an analyst at Corredores Asociados Sa, said the market had already “priced in” in the sale of Inversiones Argos SA’s stake in Cementos Argos since it was announced last month. The stock is “attractive” at this level, he said.

To contact the reporter on this story: Paulo Winterstein in Sao Paulo at pwinterstein@bloomberg.net

Last Updated: November 18, 2009 15:45 EST