Mexico peso sinks 1.52 pct, bonds gain on rate view

(Rewrites throughout, adds analysts' quotes, closing peso price)

MEXICO CITY, Jan 8 (Reuters) - Mexico's peso weakened sharply on Thursday and stocks sank on fears about the local impact of the U.S. recession, while bonds rose to nearly a 9-month high on hopes borrowing costs will fall.

The peso MXN= MEX01 weakened 1.52 percent to 13.645 per dollar as investors bet U.S. non-farm payroll data on Friday would show the economy of the United States shed more than half a million jobs.

"Some investors are clearing positions ahead of the payroll report," said Mario Copca, an analyst at MetAnalisis consultancy in Mexico City. "Given Mexico's links with the United States, the outlook isn't good."

The U.S. recession will bring economic growth to a standstill this year in Mexico, which sends around 80 percent of its exports to its northern neighbor, Mexico's finance minister said on Thursday. [ID:nN08536339]

The central bank sold $226 million on Thursday in currency markets to prop up the battered peso. The currency lost 21 percent against the dollar in 2008.

The IPC stock index .MXX fell 1.44 percent to 21,798 points as U.S. stocks sank after Wal-Mart Stores Inc (WMT.N) issued disappointing December sales and a dim outlook, stoking worries of a deepening U.S. recession.

"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.

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:nN08527930]

Traders said energy price cuts announced by the government on Wednesday could help tame inflation, raising chances the central bank will cut interest rates soon to boost the economy.

"The government's action on energy prices is increasing the chances the central bank could act sooner than expected," said Ricardo Aguilar, an analyst at Invex brokerage in Mexico City.

The government's benchmark 10-year peso bond MX10YT=RR rose 0.518 of a point in price, pushing its yield down 8 basis points to 7.58 percent.

In the equities market, shares in top retailer Wal-Mart de Mexico (WALMEXV.MX) fell 1.18 percent to 33.65 pesos after the company's same-store sales fell 0.8 percent in December, its weakest monthly reading in 2008. (Reporting Michael O'Boyle and Noe Torres, Editing by Chizu Nomiyama)