Mexico's central bank sells $400 million in foreign reserves to help falling peso

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MEXICO CITY (AP) -- Latin American stocks declined Thursday and Mexico's peso tumbled further after hitting a three-week low amid mounting concerns over the depth of the global financial crisis.

Mexico's central bank sold $400 million in foreign currency reserves Thursday as the peso tumbled to 13.8 to the dollar trading compared to 13.5 on Wednesday. The bank sold the currency for an average rate of 13.52. In all, Mexico has sold off more than $14 billion of its foreign reserves since October.

Mexico's benchmark IPC index dropped 2.09 percent to 18,190 as world markets fell on news that U.S. unemployment claims unexpectedly jumped to a 16-year high. The gloomy global economic outlook also was reflected in oil prices, which fell below $50 a barrel for the first time since January 2007.

Argentina's Merval index was down 6.04 percent at 869.49 after closing Wednesday at 925.4 as the senate debated a government takeover of private pension funds.

And in Colombia, the ISBGC index was down 1.5 percent to 6,904. Chile's IPSA index slipped 3.5 percent to 2,400.

Latin American equities and currencies have been battered by the global economic downturn, with the region's biggest stock indices losing more than 40 percent of their value as wary investors dump assets to cover losses at home.

The Bovespa was closed for a holiday in Brazil, where Citigroup Inc.'s CEO Vikram Pandit expressed optimism that the economy will withstand the crisis. Pandit said Citigroup expects to expand its operations in Latin America's biggest economy -- since emerging markets will be where the greatest growth happens.

"We want to increase our presence in Brazil, Pandit told The Valor Economico business newspaper, adding that in the future, the dominant role of the American consumer could be taken over by consumers in Brazil, China, India and Russia.