Nov. 17 (Bloomberg) -- Cia. Vale do Rio Doce, the world's biggest iron-ore producer, fell to the lowest this month after Banco Santander SA cut its forecast for the U.S.-traded shares by half because of a ``more challenging'' global outlook.

Rio de Janeiro-based Vale dropped 4.1 percent to 23.50 reais in Sao Paulo trading at 10:22 a.m. New York time. The American depositary receipts fell 2.8 percent to $11.15 in New York.

Vale's ADRs will likely trade at $18 each at the end of 2009, wrote analyst Felipe Reis. That's a 55 percent cut from his previous estimate of $40 for the ADRs.

``We are adjusting our estimates for Vale in order to reflect the more challenging scenario in the commodities market,'' Reis wrote in a note. The cut takes into account ``the significant global economic slowdown,'' he wrote.

Merrill Lynch & Co. today cut its 2009 economic growth forecast for Brazil to 2.9 percent, from a previous estimate of 3.1 percent, as scarcer credit and the lagging effect of monetary tightening weigh on consumer demand. Britain's biggest business lobby said the U.K. slump may be deeper than earlier predicted and Japan entered its first recession since 2001.

Iron-ore contract prices, at records after six years of gains, may halve next year as demand from China slumps, Australia & New Zealand Banking Group Ltd. said today in an e-mailed report. Goldman Sachs JBWere Pty, UBS AG and Macquarie Group Ltd. have lowered forecasts for iron ore since October.

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

Last Updated: November 17, 2008 10:29 EST