UPDATE 1-Mexico's Comerci surges ahead of debt deadline

(Adds detail on local investors, updates stock price, byline)

By Noel Randewich

MEXICO CITY, May 27 (Reuters) - Shares of Mexican retailer Comercial Mexicana surged on Wednesday as banks evaluated a new debt restructuring proposal in the final hours before a deadline and local investors resumed legal action.

Comercial Mexicana's stock was up 7.09 percent to 8.46 pesos at midmorning in brisk trading volume as investors bet the company will reach a last-minute deal and avoid a legal battle.

"They're expecting the problem with the banks will be resolved," said one stock trader in Mexico City. "There's nothing so far."

The supermarket operator, known as Comerci (COMEUBC.MX: Quote, Profile, Research), submitted a new plan last week to restructure up to $2 billion in debt owed to mostly-foreign banks, largely because of derivatives bets that went sour last October at the height of the world credit crisis.

Since last week, the retailer has been given two short-lived extensions on its deadline to reach a deal, keeping the dispute between Comerci and its creditors out of the courts. The latest deadline runs out on Wednesday. Comerci declined to comment.

Shares of Comerci have surged more than 60 percent this month on increased confidence the retailer will reach a deal to restructure its debt.

For months, Comerci has been trying to resolve its cash crunch without having to sell core assets or give creditors a stake in the company.