Mexico stocks, peso hurt by US car industry woes
(Adds analysts' quotes and debt prices)
MEXICO CITY, Nov 19 (Reuters) - Mexican stocks fell sharply on Wednesday as investors fretted about the prospects of a U.S. auto industry government rescue, adding to concerns over the economic decline in Mexico's neighbor and top trading partner.
The benchmark IPC stock index .MXX fell for the third day in a row, losing 1.35 percent to 18,778 while the peso MXN=MEX01 weakened 0.25 percent to 13.20 per U.S. dollar.
Executives from GM GM.N, Ford (F.N) and Chrysler [CBS.UL] headed to their second day of hearings before U.S. Congress on Wednesday to plead for a multibillion-dollar bailout after warning their industry was teetering on the brink of disaster.
"The possibility of a bankruptcy in General Motors has been a factor pressuring markets in the last sessions," wrote Jaime Ascencio, an analyst at Actinver brokerage in Mexico City, in a note to clients.
Falling U.S. demand for auto parts and vehicle exports combined with wilting local sales are curbing production at Mexican car factories, mostly owned by U.S. and Asian automakers.
Analysts say a bankruptcy at GM would hit the Mexican economy as it could also cripple large GM parts suppliers located in Mexico like Delphi.
"The peso will remain unstable with a tendency to weaken as long as they don't clear up the situation at GM," wrote Salvador Moreno, an economist at ING in Mexico City.
A major shake-up in the U.S. auto industry combined with growing expectations of a deep recession in the United States bode poorly for Mexico, which sends around 80 percent of its exports to its northern neighbor.
Mexico's peso has lost a quarter of its value against the U.S. dollar since early August as investors dumped emerging market assets amid the worst financial crisis in more than 80 years. The IPC is down more than 35 percent for the year.
In debt trading, the yield on the government's 10-year peso bond MX10YT=RR fell 19 basis points to 9.65 percent.
Mexico's central bank on Wednesday auctioned 3.2 billion pesos in 10-year interest rate swaps as part of efforts to stabilize the debt market after the global financial crisis pushed investors to dump long-term bonds and plow into short-term government debt.
In equites trading, shares in America Movil (AMXL.MX), Latin America's biggest cell phone operator, lost 2.72 percent to 19.67 pesos while its shares in New York (AMX.N) fell 3.47 percent to $29.75.
Shares in top retailer Wal-Mart de Mexico (WALMEXV.MX) lost 1.73 percent to 32.90 pesos.
Miner Grupo Mexico (GMEXICOB.MX) shed 5.72 percent to 7.75 pesos. (Reporting by Michael O'Boyle; Editing by Diane Craft)
