Oct. 18 (Bloomberg) -- Brazil and Mexican benchmark stock indexes fell as higher-than-expected inflation in the U.S. raised concern interest rates may keep rising, reducing inflows to emerging markets.

Brazil's Bovespa index of the 57 most-traded stocks in the Sao Paulo stock exchange fell 514.20, or 1.7, to 29,727.41 at 2:13 p.m. New York time. The drop was led by state-controlled oil company Petroleo Brasileiro SA. In Mexico, the Bolsa fell 158.93, or 1 percent, to 15,123.80, led by America Movil, Latin America's largest wireless telephone company.

``Inflation there raises fears of lower growth and higher interest rates,'' said Pedro Thomazoni, who handles proprietary stock trading at Banco Votorantim in Sao Paulo. The Federal Reserve may accelerate the pace of interest rate increases to curb inflation, Thomazoni said.

Producer prices in the U.S. rose by the most in 15 years last month, a Labor Department report showed, as surging energy prices boosted raw-material costs. The 1.9 percent increase in prices paid to factories, farmers and other producers surpassed the 1.2 percent expected by economists in a Bloomberg News survey.

Fed policy makers on Nov. 1 will raise rates for the 12th straight time to 4 percent, according to the median estimate of economists in a Bloomberg News survey.

`Perfect Excuse'

``The producer price data released in the United States has renewed fears that interest rates will rise more than predicted,'' said Carlos Hermosillo, an analyst with Vector Casa de Bolsa in Mexico City. ``It's the perfect excuse to sell after yesterday's rise.''

The Bolsa rose 2.6 percent yesterday, its biggest increase since April 25.

Elsewhere in the region, the main indexes in Argentina and Peru fell, while those in Colombia and Chile were little changed. The Venezuela's index rose. Morgan Stanley's index of Latin American stocks fell 1.6 percent to 1938.47.

The following stocks are making significant gains or losses in Latin American markets today. Symbols are in parentheses after the company name.

Brazil

Petrobras (PETR4 BS) fell 74 centavos, or 2.3 percent, to 31.4 reais. The stock rose 3.1 percent yesterday after the company won permits in five of the six areas offered for exploration for oil and gas in the Campos Basin offshore of Brazil. Petrobras will work alone in three areas and two in partnerships with Devon Energy Corp. of the U.S.

Brasil Telecom Participacoes SA (BRTP4 BS), the country's third-largest phone company, fell 38 centavos, or 2.1 percent, to 18.02 reais. The company will book an additional 83 million reais ($37.1 million) provision related to pension fund liabilities. The move will affect the company's third-quarter results, Stephen Graham, an analyst with UBS Warburg, said in a report today. The company will announce results on Oct. 21.

Caemi Mineracao e Metalurgica SA (CMET4 BS), an iron-ore producer controlled by Cia. Vale do Rio Doce, fell 10 centavos, or 2.8 percent, to 3.46 reais. The company is planning to invest $759 million to boost output. Caemi will carry out the investment plans over the next three years, the company said in a statement to the country's stock exchange.

Cia. De Bebidas das Americas (AMBV4 BS), or AmBev, a unit of InBev NV, fell 15.12 reais, or 1.9 percent, to 779.88 reais. The announcement of third-quarter sales tomorrow should provide support for the stocks, Jose Yordan and Tina Barroso, analyst with UBS Warburg, wrote in a report.

Telesp Celular Participacoes SA (TSPP4 BS), a unit of Vivo, controlled by Portugal Telecom SGPS SA and Telefonica Moviles SA, fell 13 centavos, or 1.7 percent, to 7.54 reais. Vivo reduced its share of Brazil's wireless phone market to 36.05 percent in September, from 36.47 percent in the previous month, telecommunications regulator Anatel said.

Mexico

America Movil (AMXL MM) fell 8 centavos, or 0.6 percent, to 12.88 pesos. Competition between Brazil's three largest wireless companies, Vivo, Telecom Italia Mobile SpA and America Movil, will pick up before year-end after companies sought to increase profits in the third quarter, said analysts such as Luciana Leocadio with Espirito Santo Securities in Rio de Janeiro. America Movil shares are up 32 percent this year.

Cemex SA (CEMEXCP MM), the world's third-largest cement maker, fell 82 centavos or 1.5 percent, to 52.86 pesos, after gaining 3.4 percent yesterday. Cemex is scheduled to report third-quarter earnings at midnight Oct. 20.

Chile

Lan Airlines SA (LAN CC), Chile's biggest air carrier, slid 35 pesos, or 1 percent, to 3,385 pesos, declining for a second day. Oil prices have surged 51 percent this year, increasing transport costs. Lan Airlines will report on Oct. 27. its earnings in the first nine months of the year.

To contact the reporter on this story: Telma Marotto at at tmarotto1@bloomberg.net;

Last Updated: October 18, 2005 14:29 EDT