MEXICO CITY (Dow Jones)--Mexico's stocks closed higher Friday ahead of a long weekend, rising for the eighth session in the past nine as U.S. equities gained with the help of positive consumer stocks.
The local stock market's IPC index of leading issues rose 0.8%, or 242.24 points, to 31002.09, resuming an upward path after a brief respite the previous session that pulled the index off a 17-month high. Volume was a moderate 141.1 million shares worth 4.04 billion pesos ($310 million).
Retailer Wal-Mart de Mexico (WMMVY, WALMEX.MX) V shares rose 2.8% to MXN51.56, Soriana (SORIANA.MX) B shares rose 0.5% to MXN32.45, and Comercial Mexicana (COMERCI.MX) UBC shares jumped 10% to MXN11.24.
Comercial Mexicana, which is in the process of negotiating a debt restructuring with derivatives counterparties and other creditors, attributed the gains to "market conditions" in a filing with the exchange.
The peso strengthened against the dollar and was quoted closing in Mexico City at MXN13.0495, compared with MXN13.1915 at Thursday's close and MXN13.4175 a week ago.
A local currency trader said the weaker dollar and corporate peso demand for tax payments due next Tuesday contributed to the currency's gains.
Mexican markets will be closed Monday for the Revolution Day holiday.
Expectations that Congress will wrap up the spending side of the 2010 budget at the weekend also helped the peso, the trader added.
Mexico's budget process has injected volatility into the exchange market as participants weigh the possibility of one or more ratings agencies downgrading the country's sovereign credit rating, without putting its investment grade at risk.
Both Standard & Poor's and Fitch Ratings have a negative outlook for Mexico, and could make a decision once the budget is completed. Most of the concern in the market was over the revenue side of the budget, which was wrapped up at the end of October with Congress improving a number of tax increases.
The currency trader said Mexican interest rates, while low, still allow for some carry trade since they are higher than those in the U.S.
The yield on 20-year government bonds due 2029 slipped 2 basis points to 8.42%, and the yield on bonds maturing in 2018 was flat at 7.86%.
BBVA Bancomer said in a report that uncertainty about the sovereign rating is holding the peso back from making further gains, generating some caution in inflows, although recent data show foreign investors continue to add local bonds to their positions.
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