Mexico peso, stocks wilt on recession worries

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MEXICO CITY, Nov 18 (Reuters) - Mexico's peso weakened sharply on Tuesday and stocks sank as investors worried that a deep global recession will drag down economic growth in the country.

The peso MXN=MEX01 lost 1.73 percent to 13.1675 per dollar at the central bank's final reference compared to Friday's close. Local markets were closed on Monday due to a public holiday.

The benchmark IPC stock index .MXX closed 2.69 percent lower at 19,036.23 points as the shares of Cemex, the world's No. 3 cement maker, hit a 9-1/2-year low.

Due to Monday's holiday, traders said investors were also factoring in steep losses in global markets from the previous session, when data showed Japan has fallen into recession and financial giant Citigroup (C.N: Quote, Profile, Research) said it will cut 52,000 jobs.

Moreover, uncertainty about a government rescue package for troubled U.S. automaker General Motors GM.N and growing expectations of a deep recession in the United States bode poorly for Mexico, which sends around 80 percent of its exports to its northern neighbor.

"In Mexico, we are also expecting growth to slow a lot in the fourth quarter and we can't rule out it going negative either," said Gerardo Copca, an analyst at MetAnalisis consultancy in Mexico City.

"With the way things are going, we could see a deceleration in the first quarter (of next year) as well," he said.

Mexico's peso has lost a quarter of its value against the U.S. dollar since early August as investors dumped emerging market assets amid the worst financial crisis in more than 80 years. The IPC is down more than 35 percent for the year.