By Carla Mozee (MarketWatch)

While the benchmark indexes posted gains in first half of 2008, brutal losses in June whittled down those advances.

Brazil's Bovespa on Monday rose 1.1% to 65,017.58 after a 0.5% loss last week. Steel stocks paced the rise, with Gerdau (GGB) up 3.8% and CSN (SID) up 1.8%. Petroleo Brasileiro SA (PBR) shares climbed 2.1% and Companhia Vale do Rio Doce (RIO) rose 18%. The companies have a combined weighting of roughly 20% of the Bovespa.

"Most of the region's basic resource stocks are moving back in the green column," said Bruce Zaro, chief technical analyst at Delta Global Advisors, who noted that commodity prices have edged lower Monday as the U.S. dollar edged higher against its major rivals.

The rise on Monday also came amid the central bank's weekly survey that showed economists now expect consumer prices to rise to 6.3% by the end of the year, up from last week's reading of 6.08%.

Mexico's IPC ended up 0.3% to 29,395.49, from last week's loss of 0.8%.

Fomento Economico Mexicano (FEX) shares rose 3.5% for the session's biggest gains.

America Movil (AMX) shares were up 0.4%. The mobile services provider, which has the heaviest weighting on the index, is track for a year to date decline of 18.6%.

Brazilian stocks closed 1.5% higher on a year-to-date basis, and rose 6.5% for the second quarter. But they lost 10.5% for the month.

The Bovespa began the month of May up 13.6% on a year-to-date basis.

Mexican equities have fallen 0.5% since the start of the year. They fell 4.9% in the second quarter, and lost 8.1% in June.

"Of course, Latin American financial markets did not escape the contagious effects," of declines in markets worldwide as investors grappled with a toxic brew of higher crude-oil prices, rising interest rates, and the ongoing credit crisis that has crippled financial stocks, said Alfredo Coutino, senior Latin American economist at Moody'sEconomy.com.

However, the IPC hasn't been down all year. It had been in positive territory from late March until June 19, and enjoyed a gain of 8.7% by April 21.

Heading into 2008, many strategists had expected Brazilian and Mexican stocks to pull back from their hefty advances considering the dark clouds of recession that hovered over the U.S. economy, but to at least outpace the performance of U.S. stocks.

The Dow Jones Industrial Average ($INDU) is now flirting with bear-market territory.

The first- and second-largest markets in the region were able to turn in better first-half performances in 2008 in part as commodity prices have soared this year. But the more factor said Coutino, stemmed from overall "economic activity continuing to advance at a solid pace," which provided attractive investment options for investors.

"These two economies have been strengthening their domestic markets in order to compensate for deceleration of external demand. We didn't see signs of deceleration for the first three months of the year," despite the negative seasonal impact from the early arrival of the Easter holiday in March.