August 9, 2007 (LPAC)--"Latin American Markets Tremble," is the way Mexico's El Financiero described the meltdown in Ibero-American stock markets today, following news that BNP Paribas SA had blocked withdrawals from three of its investment funds, combined with the ongoing shakedown in the U.S. subprime market.

Mexico's stock market--BMV-- fell by 2.54%, Brazil's Bovespa by 3.28%, and Argentina's Merval stock index by 3%. The prices for credit-default swaps for Brazil, Argentina and Venezuela also jumped significantly.

Across the board, investors and stock analysts pointed to Paribas's freezing transactions on its investment funds as a cause of the turbulence. But Marcelo Castello Branco, chief economist at Fiducia Asset Management, told Brazil's financial daily Valor that the problem wasn't Paribas in itself, but more what it represented in terms of the vulnerability of the financial system as a whole. Paribas's action intensified fears of growing losses related to the collapse of the U.S. subprime real estate market, Brazil's news agencies reported, while a trader at the Sao Paulo-based TOV Corretora reported that investors were selling off their Brazilian stocks to cover losses in the suprime "mortgage rout. They need to cover their deadweight."