Mexico's peso fell about 1 percent, while Brazil's real shed earlier gains, as investors hoped US policymakers would reinforce their recent dovish stance and not raise borrowing costs amid signs of a slowdown in the economy.

Adding to the Mexican peso's weakness was a Fitch rating downgrade for state-run oil firm Pemex to the last rung of investment grade. Pemex holds $106 billion in financial debt, the highest of any state oil company in Latin America.

"Given the systematic importance of Pemex for Mexico and its large liabilities, such concerns have implications for the sovereign and local assets," said Citi analysts in a note.

Chile's peso hovered around two-month highs ahead of a central bank policy meeting where officials are expected to raise benchmark interest rates to 3 percent from 2.75 percent.

Global stock markets steadied on the day with Apple's results providing relief amid US-China trade talks on the anvil.

Sao Paulo's benchmark index rose over 1.3 percent led by shares of material companies, in particular Vale and its holding company Bradespar, following a dam collapse last week that has killed more than 80 people and left hundreds missing.

Shares of the iron-ore miner jumped over 7 percent after a 5 billion reais plan of action to cut output by 10 percent and shut dams in wake of the Brumadinho tragedy.

Despite the production cuts and restitution costs, Vale shows the greatest improvement in earnings amongst the peers, said BMO Capital Markets in a note.

Market participants in the region also watched developments related to the fight to control Venezuela, which has the world's largest oil reserves.

While the US stayed put on its status of sanctions on the Latin American crisis-stricken nation, Russia said irrespective of internal political developments, it hopes the country will honor its obligations to Moscow, including towards oil projects.