Mexico stocks hit by Cemex slide; peso pares gains
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MEXICO CITY, June 16 (Reuters) - Mexican stocks sank on Tuesday, hit by a steep slide in cement maker Cemex for the second day after it announced the sale of its Australian assets.
The IPC stock index .MXX lost 2.26 percent to 24,336 points as Cemex (CMXCPO.MX) plunged 8.1 percent to 12.70 pesos.
Cemex said Monday it was selling its Australian unit for $1.6 billion to Swiss cement maker Holcim (HOLN.VX) as its seeks to generate cash to pay off pressing debts.
Bank of America-Merrill Lynch cut its stock rating on Cemex on Monday to "underperform" on the news. [ID:nN16266262]
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. [nN15226052]
Traders and analysts said the move suggested companies were still having trouble convincing credit markets to fund such projects.
Shares in ICA (ICA.MX)(ICA.N) lost 5.64 percent to 21.57 pesos while top homebuilder Homex (HOMEX.MX) lost 6.36 percent to 57.41 pesos.
Mexico's peso pared gains on Tuesday after industrial production data from the United States fell 1.1 percent in May, slightly worse than expected, dampening the optimism that followed data showing U.S. housing starts jumped in May.
The peso MXN=MEX01 was 0.67 percent firmer from Monday's final central bank reference at 13.36 per U.S. dollar, losing ground from levels of around 13.29.
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.
Also helping the peso were expectations the dollars from Cemex's sale would hit the local market.
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 was flat at 8.24 percent. (Reporting by Michael O'Boyle, Editing by Chizu Nomiyama)
