By Carla Mozee

Brazilian stocks led Latin American equity advancers Tuesday, aided by gains in Perdigao SA after a broker hiked its rating on the meatpacker.

Gains in most of markets accelerated alongside a late-stage surge on Wall Street, which left the S&P 500 Index up 3.2%.

Brazil's Bovespa rose 2.3% to 39,510.72, following two sessions of losses.

The iShares MSCI Brazil Index Fund (EWZ) rose 3.2%, also logging its first win in the three sessions.

Shares of Brazilian market heavyweight and oil giant Petrobras (PBR) rose 2.9% as oil surged to a more than three-high, up nearly 4% at above $49 a barrel. Investors focused on a report that U.S. housing starts unexpectedly jumped 22%, pushing to the background expectations that U.S. crude inventories rose last week. Trading was also volatile ahead of the expiration of options.

Separately, the company said average production of oil and gas rose 1.3% in February from January, to 2.247 million barrels of oil equivalent. Output rose 5.6% from the year-ago period. Domestic output averaged 1.94 million barrels of oil equivalent, up 0.9% from January, and up 6.5% from February of last year. The production figures set monthly records, said Petrobras in a statement.

Perdigao (PDA) shares were among the strongest of Brazil's price performers on Tuesday, up 7.2% after Credit Suisse upgraded the company to an outperform rating from neutral, saying that its shares are trading below historical valuation.

"We don't believe [Perdigao] is pricing-in likely market share gains in both domestic and export markets, caused by a continued weakening in smaller competitors' positioning," wrote analyst Marcel Moraes in a note Tuesday.

He said the company faces short-term challenges due to demand for protein from export markets, but that it's "the best-positioned Brazilian food company to face any adversities."

Shares of competitor Sadia (SDA) gained 4.6%. Moraes said Brazil's development bank, or BNDES, could bring Perdigao and Sadia "closer together, creating one of the leading food companies," if the bank were to become involved helping Sadia deal with 3.5 billion reals ($1.53 billion) in short-term debt that's due in the third quarter of this year.

Fellow meatpacker JBS saw its shares rise 2.4%.

Steel stocks ended mixed amid a spate of downbeat developments from the metals sector, including Anglo-American mining firm Rio Tinto's(RTP) view that a rebound in metals prices will occur this year..

Also, aluminum giant Alcoa Inc. (AA) slashed its dividend in a move to save money amid a "prolonged" downturn, and U.S.-based steel maker Nucor Inc. (NUE) warned that it will swing to first-quarter loss.

"The economy has fallen off a cliff -- and there is no visibility as to the timing of the recovery," said Nucor in a statement.

In Sao Paulo, shares of steel maker Gerdau (GGB) fell 1.3% and Usiminas fell 2.3%. But CSN (SID) turned higher, by 0.4% and Vale (RIO), the world's largest producer of iron-ore, a key component in steel production, rose 1.3%.

Chile's IPSA gained 1% to 2,482.05, Argentina's Merval index rose 1.6% to 1,037.11.

Mexico slips

Mexico's IPC, however, didn't participate in the regional advance, falling 0.6% to 19,325.05. Trading was closed Monday for a holiday.

Telecom stocks traded in the red, with shares of wireless services provider America Movil down 2%, Telefonos de Mexico (TMX) off 3.8% and Carso Global Telecom down 1.7%.

Mining firm Penoles and cement maker Cemex (CX) fronted decliners, with each losing more than 7.5%.

Shares of Airport operators Grupo Aeroportuario del Pacifico (PAC) fell 1% and Grupo Aeroportuario del Centro Norte (OMAB) gave up 4.2%, struggling in the wake of the rally in oil prices.

Elsewhere in Mexico, the government is reportedly expected on Wednesday to outline about 90 agricultural and industrial goods imported from the U.S. that will be subject to new tariffs.

The move by Mexico, which could affect about $2.4 billion worth of goods, follows a decision by the U.S. to stop a pilot program that had allowed a limited amount of long-haul trucks from Mexico to travel in the U.S. Mexico said the cancellation of the program violates terms of the North American Free Trade Agreement.

The products facing tariffs won't include the key food staples of corn, wheat, rice and beans.

Investors in Tuesday's session didn't appear to be too worried about a long-lasting impact from the tariffs development, said David Riedel, president of Riedel Research Group, who noted that U.S.-listed shares of America Movil (AMX) finished higher by 3.5%.

The shares are frequently used as a "large and liquid" proxy for international investors' attitudes toward the Mexican market, he said.

However, Riedel said the trade fight exacerbates the souring relationship between Mexico and the U.S. which stems, in part, from increasing and deadly violence related to Mexican drug cartels.

The tariffs issue "will undoubtedly be high on U.S. Secretary of State Hillary Clinton's agenda when she visits the country next week," wrote Marion Barbel and James Auger, analysts at IHS Global Insight on Tuesday.

"At the same time, the [Obama] administration has run into international controversy over the "Buy American" clause in the fiscal stimulus package. Its position on free trade thus remains somewhat ambiguous; the current spat with Mexico should give a clearer picture of where it really stands."