Sept. 4 (Bloomberg) -- Brazil's real fell the most in seven months on concern the global economic slowdown will reduce demand for the country's exports and financial assets.

The real slumped 2.4 percent to 1.7175 per dollar at 5:10 p.m. New York time, from 1.6775 yesterday. It earlier touched 1.7227 per dollar, the weakest since April 3.

``Investors are getting new evidence that world economic growth may slow while inflationary pressure in large economies is still a reason for concern,'' said Vanderlei Arruda, who manages the foreign-exchange trading desk at Sao Paulo-based Corretora Souza Barros. ``Investors are reducing riskier positions.''

Brazil's real has dropped 9.2 percent since Aug. 1, trimming its advance this year to 3.6 percent, the second-biggest gain versus the dollar among the 16 most-actively traded currencies after the Japanese yen.

The real's losses steepened after U.S. stocks slid for a fourth day. Rising unemployment claims heightened speculation that the slump in the world's largest economy is worsening. The Standard & Poor's 500 Index dropped 3 percent.

Tony Volpon, chief economist at Sao Paulo-based brokerage CM Capital Markets, said in a note to clients today he was seeing the ``first signs of panicky trading'' in the real.

Brazil's benchmark Bovespa stock index fell to the lowest in over a year, cutting into demand for reais. The Bovespa dropped 4 percent.

The yield on Brazil's zero-coupon bonds due in January 2010 jumped 22 basis points, or 0.22 percentage point, to 14.92 percent, according to Banco Votorantim. The yield on the overnight futures contract for January delivery increased 4 basis points to 13.92 percent.

To contact the reporter on this story: Adriana Brasileiro in Rio de Janeiro at abrasileiro@bloomberg.net

Last Updated: September 4, 2008 17:23 EDT