Mexico stocks gain, peso firms to 2-year high

(Updates prices, adds quotes, background)

MEXICO CITY, April 16 (Reuters) - Mexican stocks jumped on Wednesday after U.S. earnings reports reassured investors concerned about the economic slowdown in Mexico's main trading partner while the peso firmed to a two-year high.

The benchmark IPC index .MXX rose 1.27 percent to 31,775 points.

The peso <MXN=> MEX01 strengthened 0.1 percent to 10.456 per dollar after U.S. inflation data supported the view that the Federal Reserve could cut interest rates further.

Mexico's peso has gained more than 4 percent so far this year as the spread between Mexican interest rates and U.S. rates is expected to widen further, making peso assets more attractive to investors. The currency has been trading at levels not seen since early 2006 for the past two and a half weeks.

Intel (INTC.O: Quote, Profile, Research), the world's largest semiconductor maker, posted late on Tuesday quarterly revenue just beat market expectations while J.P. Morgan (JPM.N: Quote, Profile, Research), the third largest U.S. bank, posted weak profits on Wednesday that were seen as less dramatic than losses at other banks due to the credit crisis.

"Intel helped a lot and J.P. Morgan came out in line with expectations. In general the reports from this week have been very good," said Adolfo Lazaro, head Latin America equity trader at Bulltick Capital Markets in Mexico City.

Good economic news for the United States is usually good news for Mexico, which sends more than 80 percent of its exports to its northern neighbor.

Also on Wednesday, U.S. consumer prices data for March came out lower than expected following the release of higher than expected producer prices on Tuesday, bolstering the view that the Federal Reserve could still cut U.S. interest rates at its meeting later this month, traders said.