MEXICO CITY -- Latin American stocks sank Thursday for the fourth straight day despite efforts by Brazil, Mexico and other countries to pump capital into their economies and sell dollar reserves to ease credit and prop up currencies.

Brazil's Ibovespa index rose 4.3 percent to 40,262 in the morning, only to reverse course and close down 3.9 percent at 37,089, erasing the gains of the past two years.

For the second day in a row, Brazil's central bank sold dollars in a bid to stabilize the real against the U.S. dollar. The bank auctioned off US$911 million that will eventually be returned to the government, then sold an undisclosed amount that will not return.

Brazil also said it would free up about $10 billion in credit by easing limits on bank reserves. Together, the moves strengthened Brazil's currency to about 2.2 per dollar, better than 2.3 a day earlier.

Argentina's Merval index led regional losses, plummeting 5 percent to 1,287 after opening sharply higher. Colombia's IGBC sagged 2.3 percent to 8,216, and Chile's IPSA fell 1.6 percent to 2,202.

Mexico's IPC was down 1.8 percent at 20,310 points a day after President Felipe Calderon unveiled plans for $4.4 billion in emergency infrastructure spending to inject funds into the economy. And the Bank of Mexico put annual inflation at 5.5 percent, down from 5.6 percent last month, due to signs that food prices are leveling off.

A Central Bank auction of $2.5 billion in reserves helped the peso recover after briefly touching 14 to the dollar on Wednesday. The peso was trading at around 12.5 to the greenback on Thursday.

The markets' early gains evaporated as disappointing auto-sales figures and credit concerns in the U.S. dragged down Wall Street and stocks around the world, said Enrique Alvarez, head of research for Latin American financial markets at consulting firm IDEAglobal.

Latin America, Alvarez said, remains ''very susceptible to the panic level'' from fears that a global recession will reduce demand for regional commodities including metals, oil and agricultural goods.

No country has been immune. Paraguay, one of the region's economic lightweights, saw its currency, the Guarani, fall 5.3 percent against the dollar Thursday despite a government move to sell $30 million in reserves.

Christopher Garman, head of the Eurasia Group's Latin America practice, said the deepening crisis could lead Brazilian President Luiz Inácio Lula da Silva to adopt more conservative fiscal policies.

''In moments of crisis, Lula tends to rely on his more-orthodox financial advisers,'' Garman said. But he added that the president would be hard-pressed to roll back popular spending programs.

The crisis also could lend weight to Mexico's attempts to push through reforms to state oil company Pemex, Garman said.

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