The gains helped the MSCI's Latin American equities index .MILA00000PUS rise 3% to its highest since May.
Separately, data showed Brazil's industrial production undershot expectations in July, despite ending two consecutive months of contraction.
However, global sentiment remained fragile as Tehran and Washington exchanged their biggest attacks since July, sending Brent crude LCOc1 prices to more than one-month highs.
An extended rout in global bonds kept investors on edge as they grapple with inflation concerns and higher borrowing costs, with central banks globally reassessing their monetary policy trajectory.
The regional currency index .MILA00000CUS added 0.5% to hit a record high, aided by a weaker U.S. dollar. Analysts also pointed to attractive carry opportunities helping offset pressure from higher U.S. yields.
"Real interest rates remain relatively attractive in countries such as Brazil and Colombia even with U.S. yields rising," Abadia added.
Colombia's peso COP= added 0.7%, building on Tuesday's 1.8% rise. The peso had eased in recent sessions after becoming the best-performing currency in the region. Local stocks .COLCAP were up 0.6%.
Mexican equities added .MXX 0.7%, while the peso MXN= was flat.
Bank of Mexico Deputy Governor Jonathan Heath said the central bank should not cut interest rates again in the short term, and suggested any further easing may be about a year away, underscoring policymakers' caution even as inflation cooled.
MSCI's Chilean stocks .MICL00000PUS were trading higher. The local peso CLP= was on track to break a six-day losing streak that had dragged the currency to its weakest in over a month, pressured by softer prices of copper, of which the country is a major exporter.
Brazilian assets lead regional gains
Brazilian assets outperformed their regional peers as investors welcomed an election poll showing the market-friendly opposition candidate narrowing the gap with the current president, even as markets monitored rising tensions between the U.S. and Iran.
Brazil's Ibovespa .BVSP rose 2.9% to a near four-month high, and was headed for its 11th straight session of gains. The real BRL= strengthened 1% to a three-week high.
Poll narrows Lula's lead ahead of election
A poll showed Brazilian President Luiz Inacio Lula da Silva's lead over right-wing challenger Senator Flavio Bolsonaro narrowed further ahead of October's election, with the two locked in a technical tie.
"The global backdrop would normally be more challenging for Brazilian assets, but domestic political developments are offsetting much of that pressure," said Andres Abadia, chief Latin America economist at Pantheon Macroeconomics.
"As the election approaches, investors are increasingly focused on whether the next government can deliver a more market-friendly policy mix."
Brazil has been grappling with deteriorating public finances under President Lula's administration, and any news pointing to a more market-friendly government could help lift assets.
This mirrors a broader regional shift toward more business-friendly leadership, as seen recently in countries such as Colombia and Peru.
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