Mexico peso slips after Bernanke warns on US economy

(Recasts, adds comments and closing stock prices)

MEXICO CITY Dec 7 (Reuters) - Mexico's peso slipped on Monday and stocks dipped after Federal Reserve Chairman Ben Bernanke cautioned that the economy remained fragile in the United States, Mexico's top trading partner.

The peso MXN=MEX01 slipped 0.11 percent to 12.69 per U.S. dollar.

The IPC stock index .MXX closed down 0.06 percent to 32,085.17 despite a more than 3 percent jump in shares of index heavyweight Wal-Mart de Mexico after the company announced a deal to buy Walmart Centroamerica.

Bernanke told the Economic Club of Washington that tight credit and a weak labor market would be "formidable headwinds" that would hold back growth.

Mexico, which sends around 80 percent of its exports to its northern neighbor, is counting on a rebound in U.S. consumer demand to help recover from a deep local recession.

"Consumption (in the United States) is going to remain very fragile, very weak, even though employment numbers are improving, it does not mean that they are hiring again," said Oscar Jimenez, an analyst at Multivalores in Mexico City.

The peso has gained around 9 percent since the beginning of October and has rallied since a widely priced-in debt downgrade by Fitch Ratings.

"The peso is still relatively cheap but the market is too heavily weighted short dollars at this point in time, so we would not be diving into it now," said Clyde Wardle, a currency strategist at HSBC in New York.

Concerns of a downgrade made the peso lag the gains seen in other emerging market currencies this year but the currency has outperformed its peers in recent weeks, supported by expectations that a U.S. recovery will fuel a rebound in Mexico's economy.

Last week the peso broke past the key support level of 12.80 per U.S. dollar. The Mexican currency had been unable to decisively break that level since it lost about a quarter of its value late last year amid the credit crisis.

Morgan Stanley economist Luis Arcentales raised his 2010 peso forecast in a report published on Monday. Arcentales now sees the peso ending next year around 12.50 per U.S. dollar as opposed to a previous call of 13.80.

"The signs of a stronger recovery are likely to be accompanied by an improvement in investor sentiment which, based on the recent rally in the peso, seems to be shifting already," Arcentales wrote.

In stock trading, shares in America Movil (AMXL.MX) lost 1.03 percent to 30.70 pesos.

Offsetting losses, shares in Wal-Mart de Mexico rose 3.19 percent to 58.23 pesos following news it would buy its sister retail chain based in Central America. (Reporting by Michael O'Boyle and Jean Luis Arce; Editing by Diane Craft)