Mexico peso rises on global growth hopes; stocks up

(Adds analyst comments, closing stock prices, debt movement)

By Michael O'Boyle

MEXICO CITY, Aug 13 (Reuters) - Mexico's peso firmed to a nine-month high on Thursday as appetite for higher risk assets grew after data showed Europe's biggest economies had exited recession.

The peso MXN=MEX01 traded 0.58 percent stronger at 12.8705 per dollar. Early in the session, the currency hit 12.77, its strongest since November.

The IPC stock index .MXX rose 0.21 percent to 28,155.49.

Germany and France surprised markets by posting positive growth in preliminary second quarter data, adding to optimism after the U.S. Federal Reserve said it saw signs of a more stable economy in the United States, Mexico's top trading partner.

The Mexican currency pared gains after data showed an unexpected drop in sales at U.S. retailers in July, suggesting Mexico's exporters could still face a bumpy road to recovery.

"The U.S. data came out on the poor side, but people are showing they are eager to buy risk on any dips," said Gerardo Margolis, vice president of emerging markets at TD Securities in Toronto.

Investors are fretting over whether a real economic pickup will justify this year's rally in higher-risk markets.

Mexico's peso has lagged gains in other emerging currencies, due to expectations Mexico's debt could be downgraded later this year unless the government passes tax reforms.

But some strategists are betting the peso will outperform its peers in the coming months, as it benefits more from perceptions of a U.S. recovery.

"Even if we see a big sell-off in equities, the peso will still outperform against other currencies," Margolis said.

In stock trading, Mexican banks led gains, helped by optimism about U.S. bank stocks. The biggest locally owned bank, Banorte (GFNORTEO.MX), rose 7.0 percent to 38.51 pesos while Inbursa (GFINBURO.MX), the financial group controlled by billionaire Carlos Slim, gained 3.38 percent to 40.66 pesos.

Shares in dominant local retailer Wal-Mart de Mexico (WALMEXV.MX) lost 2.18 percent to 46.59 pesos after UBS cut the stock to "sell," saying it has become too expensive. On Monday, shares in Walmex hit their highest since February 2007.

In debt trading, the yield on the government's benchmark 10-year peso bond MX10YT=RR bid up 5 basis points to 8.26 percent, its highest in seven weeks.

Bonds have been pressured by expectations that the government will have to run a larger deficit in 2010 and may not be able to approve crucial tax reforms. Key proposals are expected in early September.

"Everyone is waiting for the 2010 fiscal package," said Salvador Orozco, a debt strategist at Santander in Mexico City. (Reporting by Michael O'Boyle and Lorena Segura)