Mexico stocks gain on oil price retreat; peso firms

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MEXICO CITY, July 7 (Reuters) - Mexican stocks jumped sharply on Monday as a retreat in oil prices eased concerns that high fuel costs could further weaken the economy of the United States, Mexico's chief trading partner.

The benchmark IPC stock index .MXX rose 1.01 percent to 28,624 points, while the peso <MXN=> MEX01 firmed 0.05 percent to 10.328 per dollar.

U.S. crude oil CLc1 retreated to below $142 a barrel, taking a pause from a record-breaking rally that has lifted prices by almost 50 percent this year.

Mexican stocks lost 3.27 percent last week as rising crude oil prices raised fears that high fuel costs would push U.S. consumers to spend less and further weaken the U.S. economy, the destination of around 80 percent of Mexican exports.

Traders said local equites were getting a lift as markets in the United States .DJI rose on the drop in oil prices. But some were skeptical that early gains would hold through the day.

"These levels of oil are way above the estimates from last year ... This will hit earnings reports, growth and consumption in the United States. The panorama for equites doesn't look too optimistic," said one trader in Mexico City.

In debt trading, the government's benchmark 10-year peso bond <MX10YT=RR> fell 0.47 of a point in price to bid 90.605, pushing its yield up 8 basis points to 9.25 percent.

Mexico's central bank on Wednesday will report inflation for June, which is expected to show strong pressures on consumer prices that some investors expect might push policy-makers to raise interest rates further.