Latin American stocks fall on China plunge

Stock markets around Latin America posted heavy losses Monday as plunging Chinese shares unleashed fresh turmoil on global markets.

In Brazil, home to the region's largest stock exchange, the IBOVESPA index in Sao Paulo closed down 3.03 percent, after plunging 6.49 percent in opening trade.

Mexico's IPC index closed down 1.64 percent, regaining some ground after opening with losses of more than six percent.

Argentine stocks closed down 6.3 percent, Chilean shares lost 2.77 percent and Colombian shares shed 3.52 percent.

The losses appeared to be driven by concern over shrinking Chinese demand for raw materials.

In Brazil, the companies leading the sell-off were mining giant Vale -- the world's top iron producer -- and steelmakers such as Gerdau.

China is the leading market for iron exports.

Brazilian oil giant Petrobras, which has been hit hard by a multi-billion-dollar corruption scandal in recent months, also posted heavy losses.

The jitters over China also took a toll on currencies around the region.

The Brazilian real lost 1.7 percent to 3.555 to the dollar, and the Mexican peso lost 1.2 percent to 17.43 to the dollar.

The Chilean peso fell to a 12-year low of 702.1 to the dollar and the Peruvian nuevo sol dropped to a nine-year low of 3.28 to the dollar.

In Argentina, the gap between the official and black-market exchange rates surged to more than 70 percent: officially, a dollar was worth 9.28 pesos, but on the parallel market it fetched 15.84.

Many countries in the region are battling economic slowdown.

Brazil forecasts its economy, the region's largest and number seven in the world, will shrink by 1.49 percent this year.

Mexico is predicting sluggish economic growth of between two and 2.8 percent.

Shanghai's stock market closed down 8.49 percent Monday, its biggest daily loss since 2007.

The sell-off also dragged down markets in Asia, Europe and the United States.