Mexico peso firms on cenbank rate view;stocks rise

MEXICO CITY, May 16 (Reuters) - Mexico's peso firmed on Friday as investors bet the country's inflation wary central bank would leave interest rates steady at its monthly policy review.

The peso <MXN=> MEX01 strengthened 0.45 percent from Thursday's close to near two year highs at 10.4287 per dollar and the benchmark IPC index .MXX opened up 0.24 percent to 31,617 points.

Mexico's central bank will issue its monthly statement at 9 a.m. (1400 GMT) and analysts unanimously expected policy makers to hold rates steady, according to a Reuters poll on Thursday.

"This is all on the back of the idea that we will not see a rate ease in Mexico this year," said Francisco Diez, head of emerging market trading at RBC in Toronto.

The peso has gained more than 4 percent this year as the U.S. central bank has cut interest rates, while Mexico's central bank has kept rates on hold due to persistent inflation.

Market players have increased bets for a rate hike later this year.

The relatively wide spread between the U.S. target interest rate and Mexico's key rate makes peso-denominated assets more attractive to investors.

Copper miner Grupo Mexico headed the stock gainers, (GMEXICOB.MX: Quote, Profile, Research), up 2.27 percent at 81.00 pesos. (Reporting by Michael O'Boyle and Lizbeth Salazar; Editing by Theodore d'Afflisio)