Mexico stocks slump on U.S. recession concerns

(Recasts, adds detail)

MEXICO CITY, Jan 7 (Reuters) - Mexican stocks fell on Monday and the peso held flat as investors worried a possible recession in the United States could cripple the Mexican economy.

Mexico's IPC benchmark stock index .MXX dropped 1.75 percent to 27,825 points.

The peso currency MEX01MXN= was stable at 10.9362 per dollar.

Markets in Mexico have been volatile for months because of concern that a persistent crisis in the U.S. housing and mortgage markets could lead to an economic slump.

Mexico's economy leans heavily on the United States, where it ships 80 percent of its exports.

The yield on the benchmark government 10-year peso bond MX10YT=RR rose 1 basis point to 8.19 percent.

Cellphone operator America Movil (AMXL.MX), the most heavily weighted stock in the IPC index, dropped 2.63 percent to 31.14 pesos. Its New York-traded stock (AMX.N) fell 2.72 percent to $56.85. (Reporting by Noel Randewich; Editing by James Dalgleish)