Mexico peso hit by intervention jitters; stocks up

(Recasts)

MEXICO CITY, Aug 6 (Reuters) - Mexico's peso weakened on Wednesday, hit by worries the central bank may act to weaken the currency and bets that a series of interest rate hikes may be nearly over, while stocks jumped on a drop in oil prices.

The peso <MXN=> MEX01 weakened 0.25 percent to 9.9295 per dollar while the IPC stock index .MXX closed 1.30 percent higher at 27,342.39 points.

It was the second straight day of losses for the peso on speculation Mexico's central bank may begin as soon as this week to intervene in the market, possibly by selling pesos.

"This was a speculative movement and the market is understanding the currency may be hitting an important floor," said Mario Copca, an analyst at MetAnalisis consultancy in Mexico City.

Central bank chief Guillermo Ortiz last week said an exaggerated strengthening of the peso would be inconvenient, leading some market players to bet on intervention.

The peso gained more than 4 percent against the dollar between June and the beginning of August as the central bank raised its key interest rate to 8 percent, attracting foreign investors looking to beat paltry yields on U.S. Treasuries.

While many analysts expect the central bank to hike interest rates again at its meeting this month to fight rising inflation, some investors are betting the bank could hold rates steady for some time after an August hike.

In debt trading, the government's benchmark 10-year peso bond <MX10YT=RR> rose 0.488 of a point in price to bid 93.751, pushing its yield down 8 basis points to 8.73 percent.