Sept. 23 (Bloomberg) -- Brazilian stocks tumbled for a second day on concern slumping commodity prices and slowing global growth will hurt the earnings prospects for the nation's largest metal producers and retailers.

Cia. Vale do Rio Doce paced declines for metal stocks on speculation the largest iron ore producer won't be able to boost prices as growth decelerates. Retailer Lojas Renner SA posted its biggest two-day decline since 2002 after Morgan Stanley said consumer stocks will be ``big losers'' as analysts cut profit estimates. Cosan SA Industria e Comercio dropped the most on the Bovespa as Moody's Investors Service cut its debt rating.

``There's no way Brazil can be a safe haven in this environment,'' said Felipe Taylor, an equity portfolio manager at Ciano Investimentos Gestao, the $142 million Sao Paulo hedge fund run by former central bank chief economist Ilan Goldfajn. ``Consumer stocks look cheap but a lot of the earnings estimates are far from reality as this crisis evolves. The world has changed and economic growth is slowing.''

The Bovespa index slid 1,947.41, or 3.8 percent, to 49,593.17. The BM&FBovespa MidLarge Cap index dropped 3.7 percent. The BM&FBovespa Small Cap index slid 3.7 percent. Mexico's Bolsa index fell 0.7 percent and Chile's Ipsa declined 0.3 percent. The MSCI Latin America index tumbled 5.3 percent.

Volatile Cocktail

Federal Reserve Chairman Ben S. Bernanke and Treasury Secretary Henry Paulson are pushing Congress to quickly approve a $700 billion plan to remove illiquid assets from the banking system. U.S. lawmakers have balked at rubber-stamping the proposal, with Democrats demanding support for homeowners and limits on executive pay and some Republicans questioning the plan's reach and size.

Morgan Stanley analysts said that even with these government measures, they expect further ``downside risk'' in developed economies.

``The cocktail of global slowdown, increase in risk aversion, weaker commodity prices, and more scarce access to capital does not bode well for LatAm stocks,'' they wrote in a note to clients. ``The `buy because it's cheap' mantra is misleading and might push investors into a valuation trap.''

Morgan Stanley forecast earnings growth of 11 percent for Latin American companies next year, compared with the consensus estimate of 19.5 percent.

Vale Falls

Vale dropped 5.4 percent to 33.52 reais on speculation global miners may win smaller-than-expected price increases next year as the credit crisis prompts steelmakers to cut output, analysts said. Five of nine analysts surveyed by Bloomberg News said they may trim their forecasts for annual iron-ore price rises next year of 15 percent to 30 percent.

The Reuters Jefferies Commodities index slid 1.6 percent.

Cosan fell 10 percent to 13.94 reais, the lowest since 2005. Moody's cited expansion costs and declining profit margins in cutting its rating to Ba3, three grades below investment quality, from Ba2.

Lojas Renner fell 8 percent to 22 reais. JPMorgan Chase & Co. analysts cut their share-price estimate for the retailer to incorporate its acquisition of rival Leader SA Empreendimentos e Participacoes and higher country risk for Brazil.

``A lot of the sell-side haven't calculated in this global scenario yet,'' said Taylor in a telephone interview.

Bolsa Falls

Mexico's Bolsa index fell for a second day, led by homebuilders, on concern delays in the U.S. bailout plan may deepen the housing crisis.

Corporacion Geo SAB, the country's second-biggest homebuilder, fell the most in the Bolsa index, dropping 7.8 percent to 21.71 pesos. Consorcio Ara SAB, the fourth-largest builder, retreated 3.8 percent to 6.64 pesos.

America Movil SAB, Latin America's biggest mobile-phone company, declined 2.2 percent to 24.05 pesos after Banco Bilbao Vizcaya Argentaria SA said Mexican regulators may reduce fees the company charges to complete calls to its customers.

Argentina's Merval index fell 2 percent, Colombia's IGBC declined 1.8 percent and Peru's Lima General index retreated 1.7 percent.

To contact the reporters on this story: Alexander Ragir in Rio de Janeiro at aragir@bloomberg.net; William Freebairn in Mexico City wfreebairn@bloomberg.net

Last Updated: September 23, 2008 16:26 EDT