Mexico's Stocks Open Lower, Peso Weaker Vs Dollar

Mexico's Stocks Open Lower, Peso Weaker Vs Dollar

By Anthony Harrup

Of DOW JONES NEWSWIRES

MEXICO CITY (Dow Jones)--Mexican stocks opened lower Thursday, continuing their downward momentum into a fifth straight session after a recent climb to 15-month highs.

The market's benchmark IPC index was down 1.1% to 28,642.96 points around 10:15 a.m. EDT. Volume was 36.6 million shares worth 966.2 million pesos ($72.1 million).

Cement company Cemex (CX) CPO shares were off 0.4% to MXN17.37. Cemex said Wednesday that underwriters of its capital increase will exercise their over-allotment option to buy an additional 195 million CPO shares.

The overallotments raise Cemex's proceeds from the share offer to $1.78 billion from $1.55 billion, money the company will use to pay down debt under the $15 billion debt rescheduling agreement completed last month with creditors.

The peso was weaker against the U.S. dollar, quoted in Mexico City at MXN13.4125, compared with MXN13.3375 at Wednesday's close.

The peso has remained under pressure this week with participants cautious about the 2010 budget negotiations in Congress, as well as mixed local economic data. While retail sales for July picked up from June, unemployment in August continued to rise, reaching 6.3%, its highest level since the 1995 crisis.

Scotiabank said in a report that Moody's decision this week to upgrade Brazil to investment grade - joining Fitch and Standard & Poor's - also put some pressure on the peso.

The Bank of Mexico reported Thursday that consumer prices rose 0.39% in the first half of September, in line with expectations. The increase brought annual inflation down to 5% - its lowest level since May 2008.

While stocks and currency were under selling pressure, local government bonds were gaining, pushing yields lower. The yield on bonds due 2018 was down 4 basis points to 7.93%, and 2027 bond yields were down 5 basis points to 8.45%.

"Foreign investors continue to gradually enter the local market," ING Mexico said in a report.

-By Anthony Harrup, Dow Jones Newswires; (5255) 5001 5727, anthony.harrup@dowjones.com

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