RPT-Brazil stocks, real slump on U.S. recession fears

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SAO PAULO Feb 17 (Reuters) - Brazil's stocks and currency sank on Tuesday as fresh evidence that the U.S. recession is worsening fueled concerns that a government stimulus plan may not be enough to shore up the world's largest economy.

The Bovespa index .BVSP of the Sao Paulo stock exchange slumped 4.77 percent to 39,846.97 points -- its worst daily drop in over a month.

The gloom mirrored that in the United States, where Wall Street neared bear-market lows as grim regional manufacturing data signaled the recession is deteriorating. The losses came even as U.S. President Barack Obama signed a $787 billion economic stimulus bill into law.

"The market is waiting for explanations on the workings of the (U.S.) bank rescue plan and is scared of bankruptcy among the automakers in the United States," said Luiz Roberto Monteiro at Souza Barros brokerage.

Heavyweight commodity stocks led the downside as copper prices MCU3=LX shed more than 3 percent and oil prices CLc1 sank nearly 7 percent.

State-run Petrobras (PETR4.SA) was off 5.44 percent at 26.40 reais, while miner Vale (VALE5.SA), the world's top iron ore producer, shed 6.02 percent to 29.06 reais.

Steelmakers such as Usiminas (USIM5.SA), Gerdau (GGBR4.SA) and CSN (CSNA3.SA) fell 4.49 percent, 5.40 percent and 4.37 percent, respectively.

Financials also slumped in tandem with banks abroad, with Unibanco UBBR11.SA down 5.71 percent at 13.53 reais and Bradesco (BBDC4.SA) 4.01 percent lower at 21.53 reais.

BM&F Bovespa (BVMF3.SA), which controls Brazil's biggest stock and commodity exchanges, dropped 5.10 percent to 6.51 reais.

Risk aversion also inspired investors to shun the national currency, with the real BRBY weakening 1.97 percent to 2.325 per U.S. dollar.

Interest rate futures <0#DIJ:> were lower across the board after government data showed retail sales volumes in Brazil dropped for a third straight month in December, fueling expectations of more monetary easing going forward.

(Reporting by Ana Nicolaci da Costa and Aluisio Alves; Editing by Dan Grebler)