A toxic combination of European banking concerns, a downward revision to Chinese growth and poor U.S. economic data battered Latin American currencies on Tuesday.

Brazil's real was hit the hardest, plunging to its weakest level in about two weeks, as investors fled higher-risk assets worldwide.

The U.S. Conference Board on Tuesday corrected its leading economic index for China, Brazil's top trading partner, to a 0.3 percent gain in April rather than the 1.7 percent rise the group earlier reported.

When China gets a cold, Brazil goes into cardiac arrest, said one head trader in New York.

The Brazilian real (BRBY) was bid down 1.28 percent at 1.804 reais per U.S. dollar on the local spot market in early afternoon trading.

The bid quote for the one-month NDF BRL1MNDFOR=, one of the most popular ways to trade the real's movements due to Brazil's currency controls, rose to 1.8087 from 1.7821 at the end of the previous session, implying further depreciation in the weeks ahead.

Risk aversion is most definitely the order of the day as more and more people discuss the prospects for a dreaded double-dip recession, wrote Andrew Wilkinson, senior market analyst at Interactive Brokers Group in Greenwich, Connecticut.

The MSCI Latin American stocks index .MILA00000PUS sank 4.2 percent to trade around levels of early to mid-June.

Worries over fiscal problems in the euro zone ahead of bank repayments to the European Central Bank also weighed on the region's currencies.

European banks must repay 442 billion euros ($545.5 billion) in emergency loans to the ECB by Thursday, leaving a potential shortfall of more than 100 billion euros in the financial system.

Strikes in Greece and Spain also highlighted resistance to budget cutbacks across Europe, making investors even more nervous.

A sharp drop in U.S. consumer confidence put further pressure on Mexico, which relies on its northern neighbor to buy about 80 percent of its exports.

Fears over unemployment caused confidence among U.S. shoppers to slump in June after rising for three months, data showed on Tuesday.

The Mexican currency MXN= weakened 0.8 percent to 12.8430 per dollar -- sinking to its lowest level in almost three weeks.

The killing on Monday of a leading candidate for governor of a state in northern Mexico, the highest-profile political killing in 16 years, hit the peso in the previous session. The currency could come under further pressure if concerns grow that violent drug gangs are stepping up intimidation ahead of local elections on Sunday.

A high-level political assassination is bound to have deeper ramifications, said Francisco Diez, director of emerging market trading at RBC Capital Markets in New York.

The Chilean peso CLP= lost 1.14 percent to 543.20 per dollar, sinking to its lowest level in almost three weeks, tracking weaker prices for the country's main export, copper.

The foreign scenario is absolutely negative: Asian bourses closed with losses, European markets are down and the same goes for U.S. stock futures. Add to that the sudden drop in raw material prices, a trader in Chile said.

Yields on Brazilian interest rate futures contracts <0#DIJ:> also fell following a report showing inflation in Brazil had slowed in June from the previous month.

The data, released by the Getulio Vargas Foundation research group on Tuesday, put less pressure on the country's central bank to combat inflation by continuing to increase the cost of borrowing aggressively.

The yield on the contract due January 2012 DIJF2, one of the most popular contracts of the afternoon session, dipped to 11.99 percent from 12.04 percent.

(Additional reporting by Alonso Soto in Santiago; Editing by Dan Grebler)