Colombia's main stock index tumbled the most in six weeks, posting the biggest decline among global indexes, on concern that rising political tensions between Colombia and Venezuela will damage trade ties.

Textiles Fabricato Tejicondor SA, a fabric maker that gets a tenth of its sales from Venezuela, capped its steepest two-day drop since June 2006. Compania Colombiana de Tejidos SA, another textile exporter, dropped the most since October 2004.
The IGBC Index fell for a fourth day, sliding 4.6 percent to 8,561.11. Trucks haven't been allowed to cross the countries' common border since yesterday as the conflict threatens the more than $5 billion in annual trade between Colombia and Venezuela.
“The real concern is trade,” said Greg Lesko, who helps oversee $1 billion as managing director at Deltec Asset Management in New York. ``The odds of an actual significant military conflict at this juncture are still fairly low.”
The customs checkpoints at three border crossings between the two countries have been closed, Arsenio Manzanero, a representative from Venezuela's national transportation chamber, said in a telephone interview today.
Worse Situation
“Today, people are perceiving a worse situation,” Marcela Giraldo, head of equities research at Bogota-based brokerage Corredores Asociados, said by phone. “It is related to the possibility of commercial trade between Colombia and Venezuela and Ecuador being closed.”
Fabricato slid 9.3 percent to 28.20 pesos. The company, which has lost 15 percent in the past two days, generates 11 percent of its sales from Venezuela, Andres Jimenez, an analyst at brokerage Interbolsa, said by phone from Medellin.
Rival textile exporter Coltejer plunged 16 percent to 5 pesos. Enka de Colombia SA, a fiber and textile maker that also does business in Venezuela, dropped 8.8 percent to 11.40 pesos.
Venezuela is Colombia's second-largest export market behind the U.S. Colombian exports to Venezuela rose 87 percent in the 12 months through November 2007, according to Bear Stearns Cos.
“If commercial relations between Colombia and Venezuela were to deteriorate, or if the border is closed (a worst-case scenario), Colombia's current account deficit might widen substantially,” Bear Stearns Cos. strategists including Thierry Wizman wrote in a research note.
Indirect impact
Trade disruptions would have an indirect effect on other companies such as Suramericana de Inversiones SA, Bancolombia SA and Cementos Argos SA because of the cross-holdings among Colombia's larger listed companies, they wrote.
Argos, Colombia's largest cement maker, fell 4.4 percent to 6,780 pesos. Suramericana, the country's biggest insurance holding company, dropped 5.7 percent to 14,660 pesos while Bancolombia, its biggest bank, slid 3 percent to 13,700 pesos.
The plunge in Colombia stocks was compounded by declines in global markets, Lesko said.
The MSCI index of Latin American shares fell as much as 3.1 percent as U.S. stocks hit an 18-month low after Federal Reserve Chairman Ben S. Bernanke urged banks to write down more mortgage debt and oil, gold and copper prices dropped from records.
(Source: Bloomberg)