Mexico stocks sink on Cemex slump; peso slips

(Recasts, adds trader comment and closing prices)

MEXICO CITY, June 16 (Reuters) - Mexican stocks sank on Tuesday as asset sales and a downgrade hit cement maker Cemex for a second day, while the peso dipped as U.S. data spurred fears of an anemic economic recovery in the United States.

The IPC stock index .MXX lost 2.71 percent to 24,224.83 in its steepest one-day percentage drop since late April as Cemex (CMXCPO.MX) fell 6.01 percent to 12.99 pesos.

Cemex said Monday it was selling its Australian unit for $1.6 billion to one of its main competitors, Swiss cement maker Holcim (HOLN.VX), as its seeks cash to pay off pressing debts. For more see [ID:nN16295076].

Bank of America-Merrill Lynch cut its stock rating on Cemex on Monday to "underperform" on the news. [ID:nN6G270432]

Mexican homebuilders and infrastructure companies were also hammered after Mexico's top building company ICA said on Monday it would turn to equity markets to finance infrastructure and housing projects. [ID:nN16294871]

Traders said the move suggested firms were having trouble convincing credit markets to fund such projects. Shares in ICA (ICA.MX)(ICA.N) lost 6.74 percent to 21.32 pesos while top homebuilder Homex (HOMEX.MX) lost 4.7 percent to 58.43 pesos.

Mexico's peso lost ground after a surprisingly strong drop in U.S. industrial production data dampened optimism that followed data showing U.S. housing starts jumped in May. An early rally in both Mexican and U.S. stocks fizzled.

"Once equities were not able to push any higher, a lot of profit-taking hit the market," said Francisco Diez, head of emerging markets trading at RBC Capital Markets in New York.

POORER PESO PROSPECTS?

The peso MXN=MEX01 pared gains from an early intraday high of 13.2820 per U.S. dollar to 13.43 per dollar at the central bank's final 1:30 (1830 GMT) reference, then slipping 0.52 percent to 13.50 in late afternoon trade.

The U.S. downturn has driven Mexico into a deep recession, and hopes for a recovery in the country's economy depend on a rebound in the United States, its top trading partner.

RBS Securities analyst Flavia Cattan-Naslausky wrote in a report that the Mexican peso may perform worse than Brazilian and Chilean currencies in the second half of 2009 and in 2010.

"We view the Mexican peso's underperformance in the last few weeks as evidence of increasing differentiation on the part of the markets in regards to growth prospects and policy effectiveness," Cattan-Naslausky wrote.

Mexico does not have a strong fiscal surplus, like Chile, to spend on stimulus plans, and Mexico sends about 80 percent of its exports to the United States, while Brazil has European, Asian and South American trading partners.

In debt trading, the yield on the government's benchmark 10-year peso bond MX10YT=RR edged down 1 basis point to 8.23 percent.

Mexico's central bank is widely expected this Friday to lower its key interest rate, now at 5.25 percent, for the sixth straight month in an attempt to revive economic growth. (Reporting by Michael O'Boyle; Editing by James Dalgleish)