By Carla Mozee

Latin American natural resource and financial stocks were among those hit Tuesday, with the broad selloff in equities reflecting investor worries that the U.S. Federal Reserve may not significantly ramp up efforts to prevent further slowing in the economy.

Investors "are not sure the Federal Reserve is going to implement new stimulus. There's discontent with the possibility that the Fed is going to do nothing at the end of the meeting," said Alfredo Coutino, director of Latin American research at Moody's Economy.com, in a telephone interview.

"It seems that markets are 50/50; they keep some hopes, but they are doubting that the Fed is going to do something, at least today."

In Mexico City, the IPC index fell 0.8% to 32,567 as just a handful of its 35-listed issues traded higher. Fixed-line operator Telefonos de Mexico (TMX) rose 1.4% and conglomerate Alfa rose 0.8%, winning back a portion of its 1.6% loss on Monday.

Banking firm Grupo Financiero Banorte shares slumped 1.8% and Grupo Financiero Inbursa lost 0.8% while Banco Compartamos edged up 0.4% ahead of the Federal Reserve's decision.

Mexico, with its high exposure to the U.S. economy, "is worried about the signs of decelerations that the U.S. economy is sending, particularly in the past few weeks," said Coutino.

"That implies that...the strong recovery that the Mexican economy registered in the first half of this year is going to go down during the second half. It's important to see that policy makers in the U.S. are ready to take actions in terms of supporting the U.S. recovery."

Nervousness about the Fed decision due at 2:15 p.m. Eastern is reflected in the Mexican peso, he said.

The U.S. dollar rose 0.4% against the Mexican currency, which traded at 12.654 pesos. The dollar gained 0.7% against Brazil's real, which traded at 1.761.

In Sao Paulo, the Bovespa dropped 1.3%, with heavily weighted mining stocks posting the worst loss as a group, down 2.2%. MMX Mineracao shares fell 3% while Vale (RIO), the world's largest iron-ore provider, slid 1.8% and steel producer Gerdau (GGB) fell 2.4%. Also, oil giant Petrobras (PBR) gave up 1.5%.

While dollar-denominated commodity prices came under pressure as the U.S. dollar hit its highest level in month, investors in Brazilian assets also assessed a report that imports in China slowed in July from the previous month, while exports surged. China is Brazil's largest trading partner.

Meanwhile, in Buenos Aires, only shares of power provider Edenor (EDN) were higher in the Merval index, by 0.8%. Losses in the other 14 components, including a 2% fall in locally traded shares Brazil's Petrobras, pushed the Merval down 1.2% to 2,398.

In Santiago, the IPSA fell 0.4% to 4,477, putting it on track to post its first loss in five sessions. The index finished the previous session at a record closing high.

Among exchange-traded funds, the iShares MSCI Mexico Index Fund (EWW) fell 1.2%. The iShares MSCI Brazil Index Fund (EWZ) lost 1.6% and the iShares MSCI Chile Investable Fund (ECH) fell 0.5%.

Also down, the iShares S&P Latin America 40 Fund (ILF) fell 1.4%.