Sao Paulo - The global financial crisis unleashed panic Monday in Latin American financial markets, which suffered steep plunges - with trading suspended twice in Sao Paulo - before undergoing a relative recovery towards the end of the session.

In Sao Paulo, the largest stock exchange in Latin America, trading was suspended just 18 minutes after the starting bell, after the leading index Bovespa fell over 10 per cent.

When trading resumed, stocks continued to fall in relation to the previous day's closing, and the activity had to be suspended again, this time for an hour.

The Brazilian real also took a free fall against the dollar, prompting the Brazilian Central Bank to sell 2.5 billion dollars in an effort to contain the local currency's depreciation.

Brazilian President Luiz Inacio Lula da Silva called Central Bank President Henrique Meirelles and Finance Minister Guido Mantega to an emergency meeting later Monday in Brasilia, and Mantega called the current crisis "perhaps the worst since 1929."

Trading is halted automatically to calm down the markets in the Brazilian financial metropolis when there are changes of over 10 percentage points, and is then suspended for half an hour. Another so called circuit-breaker is reached should the Bovespa fall by another 5 per cent after trading resumes, and activity would then cease for an hour.

At 10:18 am (1318 GMT), the Bovespa had fallen by 10.5 per cent and trading was suspended.

Following the half-an-hour break, however, trading had to be suspended again at 11:44 am (1444 GMT), after the plunge reached 15.06 per cent compared to the previous day's close.

Trading resumed with a slight recovery, and at 2:40 pm (1740 GMT) stocks had fallen 11.15 per cent in relation to Friday closing, with the Bovespa on 39,554.09.

However, there was a recovery at the end of the session, in line with US markets, and Sao Paulo closed down 5.43 per cent, at 42,100.79. Just months ago, the Bovespa index had neared 74,000.

"We have no solvency problems, we are only suffering a liquidity problem as a result of that reduction in international credit," Mantega said.

In a joint statement to the media Monday in Brasilia, close to the end of trading in Sao Paulo, Mantega and Meirelles said they will use some of the country's foreign exchange reserves - currently amounting to more than 206 billion dollars - to provide credit lines for export until the "most acute stage" of the crisis is over.

"We are using the reserves intelligently, to keep their level and at the same time give liquidity to the market," Mantega said.

According to Brazilian economist Miguel Daud, the steep fall in markets around the world is evidence of the fear that the rescue plan passed last week by the US Congress is not enough to solve current financial turbulence, and underlined concern that Europe and other regions might be "contaminated" with financial sector problems.

"Brazil is vulnerable to that crisis, because it depends a lot on international liquidity," Daud said.

The circuit breaker was introduced in Sao Paulo in the late 1990s, to handle successive foreign exchange crises from 1995 to 1999, when the government of President Fernando Henrique Cardoso introduced a huge devaluation of the real and adopted a system of floating exchange rates.

The circuit breaker was triggered a week ago, for the first time in a decade, after the US House of Representatives initially rejected the US government plan to rescue the financial sector.

In Mexico, the IPC index fell 5.40 per cent by the time the market closed. It had started trading down 9.88 per cent, although it later recovered somewhat and was losing just over 6 per cent half-way through the session.

In the Buenos Aires stock exchange, in turn, the Merval index fell by 11.27 per cent in barely one hour at the start of trading and after a slight recovery was losing 10.1 per cent at 2 pm (1700 GMT). By closing time, however, it had recovered and had fell only by 5.91 per cent in relation to Friday.

Argentine authorities evaluated whether to suspend trading completely but instead suspended trading only in certain shares, a measure which affected the titles of several companies Monday.

Throughout the region, the stock exchange decline came hand in hand with a depreciation of local currencies against the dollar.

The dollar was worth 2.20 units of the Brazilian real Monday, with a rise of 7.53 per cent in relation to Friday. The dollar also appreciated by close to 1 per cent against the Argentine peso, while the US currency gained 6.78 per cent against the Mexican peso.

In the case of the Mexican peso, this was its worst depreciation in a single day since 1995, when Mexico suffered a severe economic crisis.