By Carla Mozee

Brazilian stocks slipped and Mexican stocks managed to wiggle out of negative territory on Tuesday in the wake of a downbeat outlook for crude demand and a report that U.S. consumers are still on edge about economic conditions.

Brazil's Bovespa pared losses, but finished down 0.1% at 54,471.54, its first decline in three sessions.

The benchmark was weighed in large part by a 2.2% fall in shares of oil firm Petrobras (PBR). Oil prices fell $1.15 to $67.23 a barrel after the chief executive of British oil giant BP PLC (BP) said recent economic data suggested the global economy could stabilize this summer, but that any recovery would likely be sluggish.

Metals prices were lower as the U.S. dollar gained strength against its rivals. Brazilian steel stocks were mixed, with Gerdau (GGB) lower by 0.8% while Usiminas rose 2.8%.

The dollar rose after the Conference Group said its index of U.S. consumer confidence fell more by a more-than-expected amount in July, to 46.6, from June's reading of 49.3 in June.

"Clearly the very weak employment situation is taking its toll," wrote Jennifer Lee, an economist at BMO Capital Markets in a note. "Especially with Fed officials of late warning that the jobless rate is headed higher."

On Wall Street, the S&P 500 Index (SPX) fell 0.3% and the Dow Jones Industrial Average (DJI) lost 0.1%.

Signs of continued weakness in the U.S. economy are closely tracked by investors in Latin America, particularly those participating in Mexico's markets as Mexico ships about 80% of its products to its northerly neighbor.

In Mexico City, the IPC reversed course to finish 0.1% higher at 26,850.75, with help from 1.7% rise in shares of Femsa (FMX) after the beverage maker posted a 19% increase in second-quarter sales to 48.18 billion pesos on flat net earnings.

Shares of market heavyweight America Movil (AMX) fell 1.1%, cement maker Cemex (CX) lost 1.3% and electronics retailer Grupo Elektra lost 1.1%.

Home builder Urbi fell 5.6% after the company reported a 28% decline in second-quarter earnings to 414 million pesos as sales fell 19%. The shares gained more than 7% ahead of the results.

Urbi's EBITDA fell 14% from the year ago period to 899 million pesos, which was 18% below a forecast from Deutsche Bank.

In economic news, Mexico's statistics agency said its economic activity indicator fell 11.1% in May from the same month a year ago.

"Indeed, the main drag continues to be the U.S. recession and the consequent weakness of domestic market," wrote Alfredo Coutino, director of Latin American research at Moody's Economy.com, in a note. "But in May production and commerce were disrupted by the unexpected [swine-flu outbreak] for at least two weeks."

Moody's expects a contraction of about 10.5% in gross domestic product for the second quarter.

Back in Sao Paulo, shares of iron-ore giant Vale (RIO) slipped less than 0.1%. The company is expected on Wednesday to report earnings of $1.34 billion on net revenue of $4.92 billion, according to a survey of analysts by Dow Jones Newswires.

Revenue and earnings before interest, taxes, depreciation and amortization is expected to come in lower than the first-quarter period because of lower average sales prices of iron ore and flat growth in volume sales, according to Banif Securities.

"Furthermore, Vale suffered from the appreciation of the [Brazilian currency] real against the U.S. dollar, which should erode its net revenues ... and put some pressure on costs," the firm wrote.