Mexico bonds gains on rate view; stocks, peso slip
(Recasts, adds trader and analyst's quote)
MEXICO CITY, Jan 8 (Reuters) - Mexican bond prices gained on Thursday after in-line inflation data raised hopes that borrowing costs would fall, while stocks and the peso weakened on fears about the local impact of the U.S. recession.
Mexican consumer prices rose at the fastest pace in eight years in 2008, the central bank said on Thursday, but the results were close to market expectations. [ID:N08527930]
Traders said energy price cuts announced by the government on Wednesday could help tame inflation, raising chances the central bank will cut interest rates to boost the economy.
"We saw a lot of buying after the inflation data. Investors are expecting a rate cut soon," said a trader in Mexico City.
The yield on the government's benchmark 10-year peso bond MX10YT=RR rose 0.453 of a point in price, pushing its yield down 7 basis points to 7.59 percent, the lowest in 8-1/2 months.
The peso MXN= MEX01 pared early losses, but was still 0.64 percent weaker at 13.50 per dollar.
The IPC stock index .MXX fell 1.74 percent to 21,730 points as U.S. stocks sank after Wal-Mart Stores Inc (WMT.N) issued disappointing December sales and a dim outlook.
Shares in top retailer Wal-Mart de Mexico (WALMEXV.MX) fell 2.54 percent to 33.40 pesos after the company said its same-store sales fell 0.8 percent in December, its weakest monthly reading in 2008.
America Movil (AMXL.MX), Latin America's biggest cell phone operator, lost 1.05 percent to 21.65 pesos while its shares on Wall Street (AMX.N) shed 1.53 percent to $32.09.
The U.S. recession threatens to slow growth to a halt in Mexico, which sends around 80 percent of its exports to its northern neighbor, Mexico's finance minister said on Thursday. [ID:N08530329]
"The more bad news we have on the macroeconomic side in the United States, the more we will be affected here," said Francisco Suarez, head of analysis at Actinver brokerage in Mexico City. (Reporting Michael O'Boyle and Noe Torres; Editing by Dan Grebler)
