MSCI's index tracking LatAm equities rose 0.9%, reversing earlier declines. Its currency equivalent was down 0.1%.
Mexican stocks were among the top gainers, up 1.4% and set for their biggest daily jump in a month. Miner Grupo Mexico gained 3.4%.
Its peso, however, depreciated 0.4% on expectations that the central bank will keep its interest rate unchanged for the third consecutive meeting this week, despite a rise in U.S. borrowing costs.
Mexico's economy, the region's second largest, likely expanded 2.5% in August year-on-year, a preliminary estimate showed on Tuesday, while retail sales in the country declined 0.1% in July from June.
Brazil's benchmark index Ibovespa gained 0.5%, and the real edged 0.1% higher.
Brazil's central bank said on Tuesday trends in non-earmarked lending were consistent with a slowdown in economic growth, as tight monetary policy continued to restrain activity in Latin America's largest economy.
With earnings season yet to begin and the outcome of the country's October presidential election still uncertain, investors expect geopolitical developments and commodity prices to determine the sentiment.
"With the Fed entering a tightening cycle and the Middle East conflict weighing on oil prices, commodities and foreign exchange prices will remain key drivers for the region's markets until we see some clarity from elections later," said Michael Dehal, senior portfolio manager, Dehal Investment Partners at Raymond James.
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