Latam stocks plunge on slowdown concerns

Trading was halted twice on Sao Paulo's Ibovespa index as stocks reached their lowest level in more than two years before rebounding. Brazil's currency, the real, slumped nearly 7 percent in its biggest one-day percentage loss against the U.S. dollar since 1999 and closed at a level not seen since September 25, 2006.

The Ibovespa later recovered, but still ended the day down 5.4 percent at 42,101, its lowest closing since Nov. 28, 2006.

Argentina's Merval fell 5.9 percent to close at 1,423, while Mexico's IPC index slid 5.4 percent to 21,749. Chile's IPSA dipped 6 percent to 2,450, and Colombia's IGBC fell 4.9 percent to 8,761.

Mexico's peso meanwhile dropped to 11.8 against the U.S. dollar, a sharp decline from 11.1 on Friday and the lowest since the government lopped three zeros off the currency in 1993.

Across the region, panicky traders said they had no idea when the market carnage triggered by the U.S. mortgage default debacle would end.

"We didn't believe the volatility and uncertainty would so quickly reach the levels we've seen in the last few months," said Ociel Hernandez, a Mexico-City based economic analyst at Bancomer, one of Mexico's biggest banks. "We're in the high part of a risky transition that is consequence of a global economic collapse."

That kind of global downturn would squeeze Latin America's middle class, which has emerged amid years of economic growth that enabled Latin American nations to spend lavishly on social programs, easing the historic gap between haves and have-nots.

"We're confronting an international economic crisis that's unprecedented for many years, and it's obviously going to make economic policy management much more complicated for all nations," Colombian Finance Minister Oscar Ivan Zuluaga said.

Monday's losses follow a batch of steep market declines on Latin American markets during three sessions last week. They mark the second time in a week that the Ibovespa fell more than 10 percent in intraday trading, and Monday was the first time since 1997 that Brazilian trading was halted twice in a day.