Mexico peso, stocks hammered by US economy worries

(Adds closing prices, analysts' quote)

MEXICO CITY, Nov 6 (Reuters) - Mexico's peso tumbled on Thursday and stocks fell after bleak reports from U.S. companies fueled worries of a deepening economic downturn in the United States, Mexico's top trading partner.

The peso MXN= MEX01 weakened 3.22 percent at the central bank's final reference to 13.07 per dollar.

The peso had fallen more than 4 percent during the session and the central bank sold $400 million in the currency market to support the battered currency.

The benchmark IPC stock index .MXX ended 3.89 percent lower at 19,650.86 points, its second straight day of losses.

Technology bellwether Cisco Systems (CSCO.O) issued a disappointing revenue outlook on Thursday and U.S. retailers posted their worst sales performance for October on record, or more than three decades.

The reports reinforced worries that the United States is slipping into recession. Mexico sends 80 percent of its exports to its northern neighbor.

"The growth conditions for Mexico are low and this is weakening the exchange rate little by little," said Ricardo Aguilar, an analyst at Invex brokerage in Mexico City.

Stock markets fell globally as investors worried interest rate cuts by the European Central Bank and Bank of England may have come too late to avert a sharp downturn in European economies, pointing to weaker growth around the world.

Mexico's central bank has limited scope to cut rates as inflation remains relatively high and a steep drop in the peso's value in October has amplified pressures on import prices, said Neil Dougall, chief economist for emerging markets at Dresdner Kleinwort in London.

The central bank has been offering dollars every day since mid-October, when the peso saw its steepest declines since a 1995 currency crisis. So far, Mexico has sold $13.5 billion from international reserves to support its battered currency.

Currency strategists at Brown Brothers Harriman in New York said mounting political risk perceptions following the suspicious deaths of senior anti-drug government officials in a plane crash on Tuesday were adding to pressure on the peso.

Two in-flight recorders rescued from the burned wreckage of a crash that killed Mexico's interior minister were being examined on Thursday although the government has said there is no evidence yet to suggest foul play. For related story, see [ID:nN06321893]

The yield on the government's benchmark 10-year peso bond MX10YT=RR rose 4 basis points to 8.97 percent.

In stock trading, shares of top retailer Wal-Mart de Mexico (WALMEXV.MX) shed 5.74 percent to 32.53 pesos.

Miner Grupo Mexico (GMEXICOB.MX), the country's top copper producer, sank 7.62 percent to 9.46 pesos.

Mexico's top broadcaster Grupo Televisa (TLVACPO.MX) fell 5.09 percent to 41.54 pesos a share while its stock trade on Wall Street (TV.N) lost 7.42 percent to $15.84.