Mexico peso firms before dollar auction, stocks up

(Recasts, adds stock movement)

MEXICO CITY, Oct 9 (Reuters) - Mexico’s peso firmed sharply on Thursday ahead of a dollar auction by the central bank designed to prop up the battered currency, while stocks jumped as global markets rebounded from Wednesday’s steep losses.

The peso MXN=MEX01 strengthened 2.13 percent to 11.995 per dollar, after its biggest intraday loss on Wednesday since an economic crisis in the mid-90s.

The IPC stock index .MXX jumped 2.08 percent to 21,108 as a temporary calm returned to markets across the world a day after central banks coordinated global interest rate cuts in an effort to quell a worldwide financial markets crisis.

The central bank said it will auction $1.502 billion on Thursday at 9 a.m. (1400 GMT) as part of its efforts to support the peso.

Prior to the auction, Mexican Finance Minister Agustin Carstens told Mexican television that the peso’s dramatic depreciation was not due to fundamentals in the economy.

On Wednesday, the peso lost as much as 15 percent in value as its exchange rate shot up to 14.32 per dollar, but the central bank’ action helped pare the peso’s losses that marked its steepest depreciation since the 1995 Tequila crisis.

In stock trading, shares in Wal-Mart de Mexico WALMEXV.MX gained 2.19 percent to 31.31 pesos. (Reporting by Michael O'Boyle; Editing by James Dalgleish)