By Carla Mozee

Latin American equities fell sharply as part of a global sell-off Monday, spurred by fears the worldwide banking and economic crisis will continue to hurt demand for regional goods.

"Negative news dominated at the start of the week, dragging stock markets lower across the board," wrote emerging market strategists at RBC Capital Markets on Monday, in a note to clients.

The analysts highlighted HSBC Holdings' (HBC) move to raise $17.7 billion from shareholders amid a drop in 2008 profit and a dividend cut, and the U.S. government extension of another $30 billion as part of a bailout for American International Group (AIG).

In Mexico, the IPC was last down 4.6% with none of its 32 constituents able to post gains. Losses were led by steel makers Grupo Simec (SIM) and Industrias CH, as their shares tumbled 14% and 9%, respectively.

Shares of America Movil (AMX), which have the heaviest weighting on the index, tumbled 5.6%, and retailer Wal-Mart de Mexico (WMMVY) fell 0.9%.

Investors learned Monday that economists surveyed by the Bank of Mexico foresee a bigger contraction in gross domestic product for the year, with a decline of 1.9% compared with January's estimate of a 1.2% fall.

The economists also expect further weakening of the peso, to 14 pesos per U.S. dollar versus the previous estimate at the 13.50 level. The Mexican peso, which fell to an all-time low against the greenback last week, recently traded at 15.4027 per dollar.

Brazil's real sank 3% to 2.442 per dollar on Monday.

A rise in the U.S. dollar against its major rivals put pressure on dollar-denominated commodities prices. Copper prices slumped 1.2% to $1.5075 a pound and silver lost 0.3% to $13.05 an ounce. The Reuters/Jefferies CRB Index (CRB), a gauge of prices for major commodities, fell 6%.

Oil prices sank 10% to $4015 a barrel on the New York Mercantile Exchange, their biggest one-session loss in about two months, on worries that the rocky economic conditions will undermine demand.

In Brazil, shares of oil giant Petroleo Brasileiro (PBR) stumbled 4% and hit intraday lows not seen in a month. Shares of Companhia Vale do Rio Doce (RIO), the world's largest provider of steel component iron ore, sank 4.1%, along with other steel stocks. Gerdau (GGB) tumbled 4.7% and Usiminas shares fell 5.6%.

The Bovespa stock index stumbled 4.3% to 36,605.56, bringing its year-to-date performance into the loss column for just the second time this year. The index is now down 2.4%.

Natura Cosmeticos shares were up 1.6%, the only issue to log gains during the session.

Stock in home builder Gafisa (GFA) paced overall losses by dropping 8.5%. Rival Rossi Residencial shares dropped 4%.

The pressure on the oil markets spilled into Buenos Aires-listed shares of Petrobras and its Petrobras Energia (PZE) unit. They fell 7.9% and 8.9%, respectively.

Argentina's Merval index, comprised of 14 stocks, dropped 7.5%. Chile's IPSA fell 2%.

On Wall Street, the Dow Jones Industrial Average (DJI) fell below the 7000 points level for the first time since Oct. 28, 1997. The S&P 500 Index (SPX) sank 4.2% to 703.

Earlier Monday, European markets were slammed, paced by banking stocks after HSBC sought to raise cash from shareholders. The U.K.'s FTSE fell 5.3%, the German DAX 30 stumbled 3.5% and the French CAC-40 index gave up 4.5%.

"Adding to the gloom was the lack of any EU [European Union] coordinated rescue package for [Central and Eastern Europe]," the RBC Capital Markets analysts said.

German Chancellor Angela Merkel said Sunday at an E.U. summit in Brussels that Germany and other members of the regional bloc were willing to help Eastern European countries on a case-by-case basis, but she rejected proposals to create a multi-billion-euro bailout fund for the region, according to several news reports.