Mexico peso dips on global bank fears, ratings eyed

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MEXICO CITY, Nov 3 (Reuters) - Mexico's peso weakened on Tuesday over concerns about the global banking sector that boosted the U.S. dollar's safe-haven appeal while worries of a possible debt downgrade for Mexico loomed.

The peso MXN=MEX01 lost 0.36 percent to 13.26 per U.S. dollar, while the IPC stock index .MXX rose 0.84 percent to 28,886.53, catching up to gains made Monday on Wall Street when local markets were closed for a holiday.

Traders and analysts said the peso's losses were spurred by aversion to riskier assets, noting the peso's movements were tracking U.S. equities.

Investors cut back on riskier assets after poor quarterly results from UBS UBSN.VS and news that UK banks Lloyds (LLOY.L: Quote, Profile, Research) and Royal Bank of Scotland (RBS.L: Quote, Profile, Research) would sell hundreds of branches and key businesses to appease regulators.

The peso recovered some of its lost ground as the S&P 500 .SPX clawed its way back to positive territory.

Traders said that tax hikes passed this weekend by Mexico's Congress to curb the country's dependence on waning oil exports may not be enough to stave off a downgrade of the country's debt by Wall Street ratings agencies.

"The tax plan did not come out so smoothly or as the president proposed, and there is some speculation that they will cut the country's debt rating," said Ramon Cordova, a trader at Base Internacional brokerage firm in Monterrey.

Many economists think Wall Street rating agencies will not be impressed by the plan that lawmakers finally approved, which makes public coffers depend more on high oil prices than a proposal from President Felipe Calderon.