Investors panicked again Wednesday across Latin America, sending shares diving in a third straight day of extremely volatile trading amid fears a recession is gripping the planet and hurting the region's largest economies.

Colombia's IGPC index led losses in afternoon trading and was down 5.9 per cent to 8,172, while Argentina's Merval index was off 4.3 per cent to 1,324.

Brazil's Ibovespa index went on a wild ride. Shares plunged 5.1 per cent when trading opened, reversed and went into positive territory but then fell again.

It was down 1.3 per cent to 39,638. Chile's IPSA fell 3.5 per cent to 2,264 while Mexico's IPC index was up 0.3 per cent to 20,996.

A drop in currency markets added to the plunge in the share values, which are reported in local currencies.

Low trading

Brazil's real sank against the US dollar to a new two-year intra-day trading low of 2.5 per greenback and only slightly recovered some lost ground after the Central Bank held three dollar auctions without disclosing the amount sold.

Mexico's peso, which had been trading at fewer than 11 to the dollar for much of the year, was hovering at about 13 per dollar on Wednesday and briefly hit 14 per dollar. And Chile's peso fell to its lowest level in four years, topping 600 pesos per dollar.

Stock markets across the region have been pummelled in recent weeks on deepening fears of a global slowdown that will crimp the region's robust growth of recent years.

Traders predict market volatility could last for weeks or months on concerns that a slowdown could devastate Latin America's commodities-based economies, reversing hard-won gains for the poor and middle class.

Brazil, with the region's largest economy, has been hit hardest because its equities were pumped up the most in recent years by massive foreign investment. Now foreign investors are dumping emerging market positions in favour of investments considered less risky.

- AP