Mexico stocks, peso slip on U.S. recession worries

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MEXICO CITY, Jan 12 (Reuters) - Mexican stocks sank on Monday on worries that the start of fourth quarter earnings reporting in the United States may indicate further worsening of the U.S. recession.

The benchmark IPC stock index .MXX lost 2.33 percent to 21,234 points.

Aluminum giant Alcoa Inc (AA.N: Quote, Profile, Research) is set to kick off the earnings season after market close on Monday and Thomson Reuters estimates that fourth quarter S&P earnings should decline 15.1 percent from a year earlier.

Signs of a deepening U.S. recession worsen the outlook for economic growth in Mexico, which sends around 80 percent of its exports to the United States.

The peso MXN=MEX01 weakened 0.81 percent to 13.755 per dollar.

"The peso fell ... due to the recent U.S. economic data, with its consequent effect in our country," Actinver analyst Jaime Ascencio wrote in a report.

A report on Friday showed that the U.S. unemployment rate surged to its highest in 16 years in December, raising concerns that consumers worried about losing their jobs would spend less.

The Mexican government said on Friday the country would languish in recession during the first half of 2009 as the U.S. downturn dries up demand for Mexican exports.

In stock trading, shares in America Movil (AMXL.MX: Quote, Profile, Research), Latin America's biggest cell phone provider, lost 1.52 percent to 21.36 pesos while its shares in New York (AMX.N: Quote, Profile, Research) shed 2.27 percent to $31.03. (Reporting Michael O'Boyle, Editing by Walker Simon)