Mexico stocks rise on hopes for Detroit bailout

(Recasts, adds trader's quotes, background)

MEXICO CITY, Dec 2 (Reuters) - Mexican stocks rose on Tuesday, following steep losses the previous session, as investors eyed a bailout of the U.S. auto industry, which is closely tied to Mexico's industrial production.

The benchmark IPC stock index .MXX gained 0.85 percent to 19,699 points as investors snapped up beaten down shares.

The peso MXN=MEX01 firmed 0.18 percent to 13.565 per dollar.

Executives of the big-three U.S. automakers are to make another plea for a $25 billion bailout before Congress as fears about possible bankruptcy persist.

"There is speculation about what decision the Congress in the United States will take with the automakers," said Manuel Lasa, head of stock trading at Interacciones brokerage in Mexico City.

Mexican vehicle and parts exports account for around one-fifth of the country's total exports, 80 percent of which head to the United States.

General Motors GM.N, Ford (F.N) and Chrysler LLC all have major operations in Mexico.

"If there is a bankruptcy at one of these companies, there would be an important loss of jobs and a drop in consumption," said Manuel Lasa said.

Moreover, projected job cuts in the United States that could result from plant closures north of the border would hit consumer spending and demand for Mexican exports.

Worries that the United States is headed into a deep and prolonged recession have weighed heavily on Mexican markets, with the IPC down more than 33 percent for the year and the peso off nearly 20 percent in the same period.

In debt trading, the yield on the government's benchmark 10-year peso bond MX10YT=RR fell 17 basis points to 8.87 percent.

The government will hold an auction on Dec. 3 to buy back local bonds worth 15 billion pesos in a program aimed at helping debt markets battered by the global financial crisis.

In stock trading, shares of Carso Telecom (TELECOMA1.MX), the holding company used by billionaire Carlos Slim to control fixed-line giant Telmex (TELMEXL.MX)(TMX.N) and its international spin-off Telmex Internacional (TELINTL.MX)TII.MX, rose 5.41 percent to 44.03 pesos.

Shares in Cemex (CMXCPO.MX)(CX.N), the world's No. 3 cement maker, gained 3.7 percent to 8.68 pesos.

Shares in troubled retailer Comercial Mexicana (COMEUBC.MX) jumped 9.66 percent to 3.52 pesos. The country's No. 3 supermarket chain is expected to present a debt restructuring plan on Tuesday and Wednesday in a bid to settle with creditors and keep afloat. (Reporting by Michael O'Boyle; Editing by Dan Grebler)