Mexican markets jump on U.S. interest rate view

(Updates prices, adds details)

MEXICO CITY, Nov 28 (Reuters) - Mexican stocks, bonds and the peso currency surged on Wednesday as investors bet the Federal Reserve will cut interest rates in the United States, Mexico's main trading partner.

The benchmark IPC stock index .MXX posted its second biggest gain of the year, jumping 4.10 percent to 29,276.39 points. The peso MXN= MEX01 firmed 0.44 percent to 10.925 per dollar at the central bank close.

The gains came after data showed sliding business investment in the United States and comments by U.S. Federal Reserve Vice Chairman Donald Kohn, who cited a need for more flexible monetary policy.

"That means a rate cut is more likely than previously thought," said David Trevino, who heads the currency trading desk at Mexican bank Banorte.

Worries about the U.S. economy have pounded Mexican assets in recent weeks. Coming into Wednesday's session, the IPC stock market index lost about 13 percent of its value over the previous five weeks.

Lower U.S. rates would make more risky assets like Mexican stocks and bonds more attractive to yield hungry investors, and could boost the U.S. economy and its appetite for Mexican exports. The United States accounts for about 80 percent of Mexico's exports.

The price of the benchmark 10-year government peso bond MX10YT=RR rose 0.531 of a point to bid 100.049 -- its biggest gain since August.

The bond's yield, which moves inversely to its price, fell 9 basis points to 7.99 percent. That is nearly 4 percentage points higher than the benchmark U.S. 10-year treasury note US10YT=RR.

In stock trading, dominant cell phone operator America Movil (AMXL.MX) led the rally, surging 4.76 percent to 32.38 pesos, while its New York traded shares (AMX.N) were up 5.51 percent to $59.37.

Cement maker Cemex (CMXCPO.MX), a top supplier of the U.S. construction industry and thus well-placed to benefit from any U.S. upturn, soared 8.34 percent to 30.93 pesos, while its New York traded shares (CX.N) jumped 8.49 percent to $28.37.

Top retailer Wal-Mart de Mexico (Walmex) (WALMEXV.MX) moved up 6.09 percent to 40.20 pesos. (Reporting by Jason Lange; Editing by Diane Craft)