The MSCI Latin American stocks index gave up 1.1 percent in its biggest one-day loss in almost two weeks.

The index fell below the 23.6 percent Fibonacci retracement of its July to November rally, suggesting the gauge could see more downward momentum in coming sessions.

Global equities fell as oil prices touched 2-1/2-year highs as investors worried that unrest could spread to other autocratic Middle Eastern states that produce oil, such as Iran or Saudi Arabia.

"The main problem is the instability throughout the Middle East," said Daniel Marques, an analyst with Agora Corretora. "The main points aren't political, they're economic."

Brazil's benchmark Bovespa stock index sank 1.22 percent.

Shares of mining company Vale, the world's largest producer of iron ore, dropped 1.83 percent. The company reports fourth-quarter earnings on Thursday. Profit at Vale probably more than tripled on a surge in iron ore prices and higher sales volumes spurred by China.

But state-controlled energy giant Petrobras benefited from the higher oil prices and limited losses analysts said. The company's preferred stock gained 1.35 percent.

Mexico's IPC index gave up 1.24 percent to 36,781.55 points, falling for the second session. The drop erased last week's gains that had briefly pulled the index out of a descending channel on its chart.

Mexican stocks have been in a downtrend since falling off a record high in early January.

Carlos Alonso, a head trader at brokerage Interacciones in Mexico City said weaker-than-expected corporate reports undermined hopes that the IPC could mount a solid rebound.

"Reports have been really bad and they do not justify a rise in the IPC to 38,000 points," Alonso said.

Mexican stocks have been in a downtrend since falling off a record high in early January.

Copper miner Group Mexico lost 2.66 percent while bank Banorte shed 4.13 percent.

Top retailer Wal-Mart de Mexico clawed back from sharp losses to close flat. The company reported a slightly lower-than-expected quarterly profit late Thursday.

Chile's IPSA index fell 1.31 percent as steel and iron ore producer CAP lost 3.65 percent while shares of fertilizer company Soquimich fell 1.56 percent.