The MSCI Latin American stock index rose for the fourth session in five, adding 1.34 percent to 4,154.91 points.

The US Commerce Department reported retail sales rose 1.1 percent in February, their biggest gain in five months and largely in line with expectations, despite higher gas prices.

Despite the market's positive reaction to the data, analysts said recent gains may not be sustained.

"We've seen a series of positive economic indicators in the United States, and investors are starting to change the way they price that news in," said Adriano Moreno, a strategist with advisory firm Futura Investimentos in Salvador, Brazil.

"Today for you to have a strong rally it's neccesary for the US economic activity indicators to come in much higher than expected," he added.

Brazil's benchmark Bovespa stock index gained 1.71 percent to 67,517.19, recovering the previous two days' losses.

Shares of the most widely-traded companies led the index higher, with preferred shares of mining giant Vale rising 2.33 percent and those of state-controlled oil producer Petrobras adding 1.58 percent.

Analysts at Ita? BBA trimmed their year-end fair value for Petrobras' preferred shares on Tuesday, citing "recurring cost increases as well as lower production" for 2012 and 2013.

Meatpacker JBS gained 0.74 percent after the head of dairy division Vigor told Reuters in an interview late on Monday the company plans to sell new stock and raise funds from bondholders in a bid to triple revenue in ten years.

Brazil's Bovespa has gained over 18 percent this year as foreign investors flooded in to take advantage of cheap shares after the index fell 18 percent in 2011, though that flow has started to reverse.

"No one is purchasing medium or long-term positions anymore because the market had a significant rally this year and prices aren't as attractive," Moreno said.

"What we're seeing is a lot of portfolio turnover, with people selling off their defensive stocks like utilities in favor of 'internal cyclicals,' such as retail, banks, and other companies linked to domestic consumption."

Brazil's central bank recently lowered interest rates by 75 basis points to 9.75 percent in a bid to stimulate domestic demand and spur growth in Latin America's largest economy.

Mexico's IPC index rose for the first session in three, gaining 0.41 percent to 37,746.08 after finding support at its 50-day simple moving average.

America Movil, the telecommunications company controlled by the world's richest man, Carlos Slim, gained 0.88 percent, driving gains in the index. Slim is financing an Internet TV network, to be funded by America Movil.

Retailer Wal-Mart Mexico rose 0.85 percent.

Chile's IPSA index fell 0.06 percent to 4,522.93.

Retailer Falabella rose 0.58 percent. Industrial conglomerate Copec dropped 0.55 percent.