SAO PAULO, Brazil -- Latin American stocks plunged Monday, led by a stunning 15 percent intraday drop in Brazilian shares, on concern the world is descending into a severe economic slowdown that could devastate the region's commodities-based economies and reverse hard-won gains for workers.

Trading was halted twice on Sao Paulo's Ibovespa index as stocks sank 15 percent -- reaching their lowest level in two years before rebounding. Brazil's currency, the real, slumped nearly 7 percent in its biggest one-day percentage loss against the U.S. dollar since 2002 and closed at a level not seen since September 25, 2006.

The Ibovespa later recovered, but still ended the day down 5.4 percent at 42,101, its lowest closing since Nov. 28, 2006.

Argentina's Merval fell 5.9 percent to close at 1,423, while Mexico's IPC index slid 5.4 percent to 21,749. Chile's IPSA dipped 6 percent to 2,450, and Colombia's IGBC fell 4.9 percent to 8,761.

Mexico's peso meanwhile dropped to 11.8 against the U.S. dollar, a sharp decline from 11.1 on Friday and the lowest since the government lopped three zeros off the currency in 1993.

Across the region, panicky traders said they had no idea when the market carnage triggered by the U.S. mortgage default debacle would end.

''We didn't believe the volatility and uncertainty would so quickly reach the levels we've seen in the last few months,'' said Ociel Hernández, a Mexico-City based economic analyst at Bancomer, one of Mexico's biggest banks. ``We're in the high part of a risky transition that is consequence of a global economic collapse.''

That kind of global downturn would squeeze Latin America's middle class, which has emerged amid years of economic growth that enabled Latin American nations to spend lavishly on social programs, easing the historic gap between haves and have-nots.

''We're confronting an international economic crisis that's unprecedented for many years, and it's obviously going to make economic policy management much more complicated for all nations,'' Colombian Finance Minister Oscar Ivan Zuluaga said.

Monday's losses follow a batch of steep market declines on Latin American markets during three sessions last week. They mark the second time in a week that the Ibovespa fell more than 10 percent in intraday trading, and Monday was the first time ever that Brazilian trading was halted twice in a day.

Brazilian equities, which have been pumped up with massive cash inflows for years, are now the hardest hit in the region. Foreign investors who only months ago gushed about Brazil's apparent immunity from the downturn are dumping shares in favor of investments they consider less risky.

Latin America must ''realize that competition for capital is going to intensify,'' U.S. Commerce Secretary Carlos M. Gutierrez told reporters on Monday, ahead of a trip to Brazil this week.

The Ibovespa has lost 34 percent of its value to date this year, including a 22 percent decline since Sept. 19, when Brazilian President Luiz Inacio Lula da Silva shrugged off questions about the impact of the U.S. financial crisis by telling reporters to ``go ask Bush.''

Silva called an emergency economic meeting with the nation's finance minister and central bank president, and the Bovespa stock exchange put in place a new rule calling for a longer trading halt if Ibovespa losses hit 20 percent in one day.

A worldwide recession would hit Latin America hard, where economies have seen strong gains amid high global demand for commodities in the past five years.

Many of the region's largest companies export agricultural products such as soy and beef, and metals including copper and iron ore, and sagging consumer markets could stem demand.

The Ibovespa is likely to bottom out around the 30,000 points, still 40 percent below Monday's close, said Ricardo Araujo, a finance professor at the Getulio Vargas Foundation university in Rio de Janeiro.

''Is there space for it to fall more? There is,'' he said.

A consumer credit boom has fueled growth in Brazil, Latin America's largest economy. But Araujo said the global credit crunch will dry up those loans, hitting the country with higher interest rates and making it harder for to qualify for credit to buy goods including cars and plasma TVs.

Yet poorer Latin Americans doubt the crisis can make their already tough lives worse.

''This only makes people who have money nervous,'' 60-year-old Jose Martinez said with a shrug outside a dollar-changing business in Mexico City. ``I'm poor, so what?''

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