Brazil's benchmark Ibovespa index slipped 0.3 percent to 50,903, its lowest close since May 25, with shares in iron ore producer Vale SA dropping 1 percent and state-run oil company Petroleo Brasileiro falling 0.9 percent. The two companies comprise nearly a third of the index.

Brazil's currency weakened slightly to 1.96 against the U.S. dollar as the nation's central bank released transcripts detailing last week's decision to slash its benchmark lending rate by a full percentage point to a record-low 9.25 percent.

The transcripts showed that the bank "continued to see gradual recovery in (economic) activity," boosting chances that it will ease rate cuts during the rest of the year, according to a research note from Barclays Capital.

Mexico's IPC index meanwhile gained 0.8 percent to 24,341, recouping midweek losses. Shares in metals conglomerate Industrias Penoles SAB climbed 4.6 percent while electronics and appliance retailer Grupo Elektra SA rose 3.9 percent. The two companies comprise about 8.8 percent of the index.

The peso gained about 0.4 percent to trade near 13.39 to the dollar a day before the country's central bank was expected to cut its own benchmark lending rate by 50 basis points to 4.75 percent, according to analysts at Grupo Financiero Banamex.

"We think Banxico is close to signaling the end to its monetary easing cycle" and will probably pursue smaller cuts in coming months to ensure the peso doesn't slip further against the dollar amid persisting inflation fears, Banamex said in a research note.

Low interest rates often drive investors to buy higher-yielding assets like stocks.

Mexico also this week said industrial output fell 13.2 percent in April from the year-ago period, the worst drop since April 1995 but still better than expected, according to UBS Pactual. While manufacturing and construction were hardest hit, lesser losses in mining and utilities led UBS analysts to see "some signs of recovery."

Battered by falling exports, tourism and money sent home by migrants, Mexico's economy shrank by 8.2 percent in the first quarter from the year-ago period.

Elsewhere, Peru's IGBVL jumped 1.4 percent to 13,093 on Thursday, while Colombia's IGBC gained 1.2 percent to 9,712 and Chile's IPSA rose 0.4 percent to 3,119. Argentina's Merval index dipped 0.3 percent to 1,530.

Latin American stocks have been pounded by the world economic crisis, which has slashed demand for the commodity exports on which many of the region's biggest companies rely. Still, regional markets have mirrored gains in U.S. and elsewhere since March, as investors bet that the worst of the global economic crisis could be ending.

Mexico's IPC has gained 45 percent and Brazil's Ibovespa 42 percent from their lows on March 3.

U.S. stocks also rose Thursday as the U.S. Labor Department reported the first decline in jobless claims in 21 months in May, and a key index of economic indicators rose for a second straight month. The Dow Jones Industrial Average gained 0.7 percent to 8,556 in New York.