Trading was automatically halted on exchanges in Brazil and Peru after declines on their benchmark indexes topped 10 percent.

Sao Paulo's Ibovespa stock index pared earlier losses to trade down 3.3 percent at 35,855 in the late afternoon. Sales were automatically suspended for 30 minutes after early morning declines topped 10 percent, plunging the index to its lowest point in two years.

Brazil's currency meanwhile fell 4.5 percent to 2.3 reals to the U.S. dollar, as the central bank auctioned at least US$589 million in reserves for 2.3 reals to the dollar in order to halt the slide. The real has lost more than 30 percent of its value since Aug. 1.

Latin American equities "keep getting dragged into the bottomless negative frenzy coming from the U.S.," said Enrique Alvarez, head of research for Latin American financial markets at IDEAglobal in New York. "This is not a domestic phenomenon coming out of emerging markets in the Latin American region, it's more a contagion effect from the U.S."

Mexico's IPC index slipped 5 percent to 19,303 in late afternoon trading. The peso, which plunged about 9 percent in the morning, hovered around 13.1 pesos to the dollar after the central bank auctioned a record US$6.4 billion in reserves to stem the slide. The bank had sold a combined US$2.5 billion on Wednesday and Thursday.

Argentina's benchmark Merval index meanwhile fell 5.5 percent to 1,216, while Chile's IPSA slid 6 percent to 2,070 and Colombia's IGBC closed down 8.7 percent at 7,503. Lima's IGBVL index was down 11.1 percent at 7,600, after mid-day losses prompted the exchange's third emergency 30-minute trading halt this week.

The region's biggest exchanges have all lost more than 20 percent since Sept. 25, as investors worry a widespread recession could slash demand for Latin American commodity exports, including oil, copper and farm crops.