Oil price surge helps Mexican peso; stocks sink

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MEXICO CITY, Aug 21 (Reuters) - The Mexican peso firmed on Thursday as oil prices surged, while stocks sank on worries about the U.S. credit crisis and as Mexico's economy grew less than expected in the second quarter.

The peso <MXN=> MEX01 strengthened 0.43 percent at the central bank's final 1:30 p.m. (1830 GMT) reference to 10.094 per dollar.

The benchmark IPC stock index .MXX closed 1.23 percent lower at 26,534.97 points in low-volume trading.

Oil prices CLc1 rose around 5 percent on Thursday, the biggest percentage gain in more than two months, driven by rising tensions between the United States and energy behemoth Russia.

Traders said that helped boost the peso as Mexico is the world's No. 6 oil producer and a major exporter to the United States. Oil revenue is one of the country's top sources of foreign currencies.

"The government takes a third of its revenue from the oil sector, so this is quite positive," said Paul Biszko, senior emerging markets strategist at RBC Capital Markets in Toronto.

Analysts also said the peso was enjoying support as investors were drawn to the relatively high yields on Mexican debt compared to U.S. Treasuries.

"Yields are high, they are very attractive and are likely to remain stable at high levels for a while yet," Biszko said.