Mexico peso soars on US growth, tax plan bets

(Recasts with tax plan speculation, adds comment)

MEXICO CITY Oct 29 (Reuters) - Mexico's peso surged by the most in nearly six months on Thursday and stocks jumped as U.S. growth data raised hopes for a recovery of Mexico's exports and speculation mounted that senators will approve a key tax hike.

The peso MXN=MEX01 gained 2.25 percent to 13.02 per U.S. dollar, its biggest one-day percentage gain since May 4.

The IPC stock index .MXX gained 2.03 percent to 29,253, snapping a six-session losing streak that wiped out most of October's gains.

Analysts said expectations were growing that opposition senators will back a 1 percentage point increase in the nation's value added tax, which could help avoid a downgrade of the country's debt.

"There are some comments circulating that PRI senators will pass the income law without any changes," said Benito Berber, an analyst at RBS in Stamford, Connecticut.

Before Thursday's gains, the peso shed 3 percent since late last week, when senators suggested they might reject the tax hike that was approved by the lower house of Congress last week.

Wall Street ratings agencies have threatened to downgrade Mexico's debt if lawmakers do not pass tax reforms as federal revenue from oil output erodes amid a decline in crude production.

The government's benchmark 10-year peso bond MX10YT=RR bid down 8 basis points to yield 8.03 percent.

The tax plan speculation added to sharp gains after the U.S. government said gross domestic product grew an unexpectedly strong 3.5 percent in the quarter as government stimulus helped lift consumer spending and home building.

"This is confirmation that the stimulus has worked and that the American economy is exiting the recession," said Ramon Cordova, a currency trader at Base Internacional in Monterrey.

Mexico sends more than 80 percent of its exports to its northern neighbor and is counting on a U.S. recovery to come out of its deepest recession since the 1930s.

The data suggested a global rally in emerging markets could climb to even higher ground, pulling along the Mexican currency and peso bonds traders said.

In stock trading, shares in miner Penoles (PENOLES.MX) added 5.54 percent to 252.50 pesos after it reported quarter-on-quarter profits as metals prices recovered. [ID:nN28189056]

Major U.S. cement supplier Cemex (CMXCPO.MX) recovered 4.71 percent to 14.66 pesos after Wednesday's 6 percent plunge on its weaker-than-expected earnings. (Reporting by Michael O'Boyle; Editing by Kenneth Barry)