Mexico peso dips on US home sales drop; Cemex sinks

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MEXICO CITY, Oct 28 (Reuters) - Mexico's peso weakened on Wednesday and stocks sank as U.S. home sales unexpectedly tumbled in September, casting doubt on the strength of the recovery in the United States, Mexico's top trading partner.

Shares in cement maker Cemex and home builder Homex plunged after both companies reported weak third-quarter reports that reinforced worries of a sluggish recovery.

"These reports are making it look like the recovery may not be so strong," said Sandra Tinoco, an analyst at Monex brokerage in Mexico City.

The peso MXN= MEX01 slipped 0.28 percent to 13.28 per U.S. dollar, while the IPC stock index .MXX lost as much as 2.03 percent to 28,718.

Sales of new U.S. homes fell in September for first time in six months.

"People are talking about how the recovery in housing in the United States will not be a rapid as some were expecting," said Adolfo Lazaro, a trader at Bulltick Capital

Mexico, which sends more than 80 percent of its exports to its northern neighbor, is counting on a solid U.S. rebound to pull out of the deepest local recession since the 1930s.

Shares of Cemex (CMXCPO.MX: Quote, Profile, Research), a major U.S. supplier, fell 4.56 percent to 14.22 pesos after it posted weaker earnings and cut its pretax earnings and free cash flow outlook for 2009. [ID:nN28275640]