By Carla Mozee

Latin American equities finished in the red Tuesday, with nervousness about what's expected to be a rough first-quarter earnings season in the U.S. spilling over into regional indexes.

Stocks had a volatile session in Brazil, pushing the Bovespa index out of positive territory for a decline of 0.8% at 43,824.43.

The Bovespa has lost ground for a second session in a row, and the "beginning of the earnings season in the U.S. was decisive into placing some caution among investors," said BB Investimentos in a market review released Tuesday.

But gains among consumer durable and process industries companies cushioned losses among miners and telecommunication providers.

Leading advancers was Cosan (CZZ) with a climb of 9%. France's Louis Dreyfus Commodities has won an agreement to purchase a stake in Brazilian sugar and ethanol producer SantelisaVale, according to Dow Jones Newswires, citing a source familiar with the matter.

Analysts were concerned that a Cosan win would have been a highly leveraged one for the company, according to the report.

U.S. stocks slid ahead of the kickoff of the reporting season by aluminum giant Alcoa Inc. (AA). The company reported after the bell it swung to a loss on lower sales as the recession prompted customers to soften demand for aluminum.

Earnings from companies on S&P 500 Index are expected to show a drop of 35.9% compared with the year-ago period. All 10 sectors of the S&P are expected to report negative year-on-year comparisons for the first time since Thomson began tracking results in 1998.

The S&P 500 Index (SPX) fell 2.4% and the Dow industrials (DJI) fell 186 points, or 2.3%.

Amid anxiety throughout the markets, Citigroup Inc. struck a note of optimism on Tuesday, saying that it believes the next bull market in Latin America is beginning and that it expects it to last for the next four or five years, "as the global economy eventually moves into recovery mode and regional fundamentals improve."

It forecast a solid rise in commodity prices during the next bull market but predicted that a "new bubble is unlikely." It also expects material, energy and financial stocks to outperform.

Citigroup said Brazil and Peru are likely to be the main drivers of the bull run and expects Mexico to catch up after a lag because of its link to weakened U.S. economic conditions. The broker also dropped Wal-Mart de Mexico and Mexican market heavyweight America Movil from its focus list.

America Movil shares fell 2.8%.

In Mexico, the IPC index fell 0.9% to 20,623.42. There, shares of Wal-Mart de Mexico lost 1.1% ahead of the retailer's report for same-store sales in March, due after market close.

The company said late Tuesday that March same-store sales fell 1.1% from the year-ago period, to 21 billion pesos ($1.56 billion). The figures were hurt in part as the most recent month March had one less Saturday than March of 2008.

Investors in Mexico and Chile also assessed inflation reports on Tuesday.

Consumer prices in March rose 0.58%, above the consensus estimate of 0.51%. Headline inflation rose 6% in March on a year-over-year basis, compared with a 6.2% increase in February.

The central bank, which meets next week to decide its next move on interest rates, has an inflation target range of 2% to 4%.

In Chile, consumer prices in March rose 0.4%, the first increase in five months. Inflation on an annual basis came in at 5%, slower than the 5.5% increase at the end of February.

The decline in inflation in Chile could bolster the central bank's decision to cut its key interest rate on Thursday. Market players currently expect a rate cut of 50 basis points from the current rate of 2.25%.

Chile's IPSA index fell 0.3% to 2,537.07.