Mexico stocks fall on AIG; bonds drop on inflation

MEXICO CITY, May 9 (Reuters) - Mexican stocks fell on Friday after a record loss at U.S. insurance firm AIG stoked concerns about the credit crisis, while bonds fell for a third straight day after inflation hit a three-year high.

The benchmark IPC stock index .MXX lost 0.67 percent to 30,544 points, with miners down on lower metals prices.

The government's benchmark 10-year peso bond <MX10YT=RR> fell 0.396 of a point in price to bid 98.186, pushing its yield up 6 basis points to 8.02 percent, a four-month high.

A report on Thursday saying that consumer prices rose 4.55 percent in the 12 months through April, well above the level the central bank says it can tolerate, reinforced expectations the central bank will not cut interest rates this year.

In stock trading, analysts and traders said that American International Group's (AIG.N: Quote, Profile, Research) $7.8 billion loss in the first quarter, as it wrote down assets linked to subprime mortgages, sparked fears that the worst of the credit crisis had yet to pass.

The crisis in world credit markets has hit investor appetite for risky assets, like Mexican stocks.

"Banks still have a lot to say that they haven't told us yet," said Rodolfo Navarrete, head of analysis at Vector brokerage in Mexico City.

Shares of top retailer Wal-Mart de Mexico (WALMEXV.MX: Quote, Profile, Research) shed 1.02 percent to 42.79 peso.

Miner Grupo Mexico (GMEXICOB.MX: Quote, Profile, Research) lost 2.97 percent to 77.49 pesos as copper futures fell as inventories in London and Shanghai surged.