The vast ash cloud spewing from Chile's Puyehue volcano caused major disruption to South American air travel on Thursday, grounding hundreds of flights and upsetting regional diplomacy.

All flights in and out of the Argentine capital were halted as well as most arriving or departing the Uruguayan capital Montevideo, forcing President Jose Mujica to postpone a Buenos Aires meeting with his Argentine counterpart.

As the travel misery intensified, organizers were also forced to postpone Friday's first annual meeting in Buenos Aires of finance ministers from the Union of South American Nations (UNASUR) regional bloc. No new date was set.

"Humans make plans, but God has the final word," the Uruguayan leader, Mujica, said on his weekly radio program.

The volcano, which rumbled to life on Saturday for the first time since 1960, is high in the Andes mountains 870 kilometers (540 miles) south of the Chilean capital Santiago, near the border with Argentina.

Northeasterly winds have spread the ash across much of southern Argentina -- threatening to hurt tourism in the mountains at the start of the winter ski season -- as well as into Uruguay and southern Brazil.

Chilean volcano monitors said Puyehue was belching ash columns that reached nearly 7.5 kilometers (4.6 miles) into the sky.

A Buenos Aires aviation official said the ash was some 9,000 meters (29,000 feet) above the Argentine capital and pointed out that planes fly on average at 10,000 meters (33,000 feet).

Volcanic ash "is very dangerous, very abrasive for plane engines and could result in very serious complications," warned Argentine Transportation Secretary Juan Pablo Schiavi.

At Jorge Newbery International Airport in Buenos Aires, some holidaymakers were clearly beginning to despair while others waited anxiously for loved ones.

"I'm waiting for my mother to arrive from Chile. She's 90 years old and probably alone in Santiago," Ana Adelardi told AFP.

One man, standing forlornly next to his wife and their baggage, said: "We're going to Salta (northern Argentina) for our first vacation. We've already paid for everything and our time is running out."

The first flight cancelations came on Tuesday, but the resumption of many routes on Wednesday had raised hopes that things would get back to normal. Officials on Thursday did not appear all that hopeful.

Most air terminals in central and southern Argentina will remain closed "until there is a guarantee that they can operate safely," read a government statement.

A fine coat of ash blanketed much of the Argentine capital Thursday.

Authorities in the Uruguayan capital Montevideo warned that visibility would be "significantly reduced" at least until early Friday.

"The current projection... is that the cloud of volcanic ash will be with us all day," Uruguay's director of the office of Meteorology and Aeronautics, Laura Vanoli, told local radio.

The bucolic Argentine resort town of Villa La Angostura, just 40 kilometers (25 miles) from the volcano, was buried under more than 20 centimeters (eight inches) of ash, enough to knock down power lines and clog water pipes.

Villa La Angostura has hosted personalities like Dutch Prince Willem-Alexander and his Argentine-born wife, Princess Maxima. According to Disney Studios, Walt Disney traveled to a nearby forest for inspiration to prepare his 1942 animated movie "Bambi."

Close to the Chilean border, in the town of El Rincon, pensioner Ruben Monsalve refused to leave his home.

"Every day I feel a bit of movement" from seismic activity, he said. "But why get scared if I'm inside my house?"

Most of his neighbors, however, fled days ago.

The eruption forced the Argentine ski resort town Bariloche, located some 100 kilometers (62 miles) from the volcano, to declare a state of emergency and close its airport.

Nearby, police rescued 16 people, including park rangers, trainee park rangers and tourists from picturesque Nahuel Huapi Lake after they became trapped on Victoria Island by volcanic debris.

In 2008, the eruption of the Chaiten volcano, also in southern Chile, spread a thick cloud of ash across a large swath of South America, grounding flights across the region.

The eruption in 2010 of an Icelandic volcano, Eyjafjoell, caused the biggest aerial shutdown in Europe since World War II, affecting more than 100,000 flights and eight million passengers.