Mexico stocks rise on hopes for Detroit bailout
(Adds analyst's quote and closing prices)
MEXICO CITY, Dec 2 (Reuters) - Mexican stocks gained on Tuesday as investors bet U.S. lawmakers will approve a bailout for that country's ailing auto industry, which is a major client of Mexican factories.
The benchmark IPC stock index .MXX closed 1.38 percent higher at 19,802.27 points as investors snapped up beaten-down shares following steep losses the previous session.
The peso MXN=MEX01 closed 0.11 percent firmer at the central bank's final reference at 13.575 per dollar.
U.S. automakers rushed to submit restructuring plans demanded by Congress before lawmakers reopen debate on a $25 billion bailout the industry says it needs to survive.
"This calms the market a bit, and there could be a bit of flows back to emerging markets like Mexico," said Gustavo Hernandez, an economist at Ixe brokerage in Mexico City.
Worries that the United States is headed into a deep and prolonged recession have weighed heavily on Mexican markets in recent months, but economists say a bankruptcy at one of the U.S. automakers would push Mexico into a more severe downturn.
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 Motor Co (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, head of stock trading at Interacciones brokerage in Mexico City.
Traders said local stocks also got a boost from news that General Electric (GE.N), a global bellwether, pledged to leave its dividend intact in a fragile economy.
The peso gained over 1 percent early in the session on hopes of a successful bailout, but it pared much of those gains after GM posted grim November sales data.
In debt trading, the yield on the government's benchmark 10-year peso bond MX10YT=RR fell 10 basis points to 8.94 percent.
The government will hold an auction on Wednesday 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, rose 4.86 percent to 43.80 pesos.
Shares in Cemex (CMXCPO.MX), the world's No. 3 cement maker, gained 5.5 percent to 8.83 pesos while its stock in New York (CX.N) jumped 8.43 percent to $6.56.
Shares in Telmex Internacional (TELINTL.MX) surged 10.52 percent to 6.87 pesos while its stock on Wall Street (TII.N) added 11.59 percent to $10.01. (Reporting by Michael O'Boyle; Editing by Leslie Adler)
