Mexico peso slips on Fitch cut, economic worries

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MEXICO CITY, Nov 10 (Reuters) - Mexico's peso currency weakened sharply on Monday after Fitch ratings agency cut its outlook on Mexico's credit rating and amid doubts China's stimulus plan would avert a deep global economic slump.

The peso MXN= MEX01 weakened 0.58 percent to 12.834 per dollar.

The benchmark IPC stock index .MXX reversed early gains of more than 2 percent to slip 0.38 percent to 19,789 points.

Fitch Ratings revised lower its sovereign credit rating outlook for Mexico to negative from stable, citing concerns about the capacity of the country to handle what may be a deep recession in the United States, less investment and lower oil prices.

Increasing signs of a U.S. recession bode poorly for Mexico, which sends around 80 percent of its exports to the United States.

Optimism from early in the session faded regarding a nearly $600 billion stimulus package announced by China to prop up their economy, the fourth largest in the world.

The Chinese stimulus package marks the latest effort by a major economy to ease the worst financial crisis in 80 years.

Also dragging down U.S. stocks were worries about General Motors (GM.N: Quote, Profile, Research). Its shares tumbled to 62-year lows on Monday after analysts downgraded the automaker, citing cash levels that may fall below the minimum in the first quarter of 2009.