Mexico stocks, peso fall; investors doubt valuations

(Adds trader comment, background, closing stock prices)

MEXICO CITY, Aug 11 (Reuters) - Mexican stocks sank on Tuesday by the most in a month as investors doubted that modest improvements in economic data justify recent gains in financial markets, while the peso slipped.

The IPC stock index .MXX lost 1.78 percent to 27,800.80 points, its biggest drop since July 2.

The peso MXN= MEX01 weakened 0.68 percent to 13.0237 per U.S. dollar, its biggest one-day slide since July 10.

Weakness in Mexican markets followed losses in Wall Street equity markets after a prominent banking analyst warned that the sector's fundamentals have not yet improved, sparking a sell-off in bank shares and wider profit-taking across markets.

The IPC closed on Monday at its highest since early July after rebounding more than 67 percent from its March bottom.

"Markets are going to cut back a bit. A lot will be re-evaluated and from there we will need to see very positive surprises in data to keep gaining," said Carlos Alonso, a trader at Interacciones brokerage in Mexico City.

Shares in Wal-Mart de Mexico (WALMEXV.MX) lost 1.19 percent to 47.45 pesos after it closed on Monday at its highest since February 2007.

Inbursa (GFINBURO.MX), the financial group controlled by billionaire Carlos Slim, dropped 3.7 percent to 38.23 pesos.

Shares in cement giant Cemex (CMXCPO.MX) gave up sharp early gains to a two-month high on news it was near a deal to refinance looming debt payments. [ID:nN11309899]

Cemex shares ended down 0.64 percent at 13.97 pesos.

"They did not give much detail and there are still a lot of doubts about how high of an interest rate they will have to pay," Alonso said.

Also weighing on markets was U.S. data showing a drop in U.S. wholesale inventories in June that was nearly double expectations, suggesting that businesses remained skeptical about a return in demand.

The United States is Mexico's top trading partner and hopes for a U.S. economic recovery pushed the peso to its highest since May on Monday following last week's gains below the key level of 13 per dollar, which the peso had been unable to consistently break since late last year.

"People didn't totally believe in the peso's recent gains, so we are seeing it pop back up. But this does not change the tendency of appreciation against the dollar," said a trader in Mexico City.

The peso got its boost last week after Moody's Investors Service unexpectedly issued a stable outlook on Mexico's debt, and analysts say the currency could outperform other emerging markets in the coming months compared with currencies like Brazil's real. (Reporting by Michael O'Boyle; Editing by Dan Grebler)