Mexican stocks weaken

Mexican stocks fell on Friday, after the country's central bank acted to drive up interest rates.
The IPC benchmark stock index fell 0.80 percent to end at 9,907.67 after the central bank said it raised its money-market "short" to 41 million pesos from 37 million pesos to ward off rising inflation.
An increase in the short reduces overnight lending to banks, which tends to push up interest rates. It is the Mexican central bank's main monetary policy tool.
"The increase in the short was not a very good factor for the market," said Jesus Viveros, an analyst at Bursametrica consulting company. "Mexico's growth is going to be a bit more restricted, and that will affect the stock market because companies will have lower profits."
Stocks in Mexico also suffered because markets fell in the United States, which buys 90 percent of Mexican exports, traders said. The Dow Jones industrial average softened 0.88 percent.
The peso lost 0.11 percent to 11.4440 per dollar by the central bank's official close.
"There was some dollar offer in reaction, but then buying resumed," said one dealer. "I think the market had already discounted the tighter monetary policy."
Higher interest rates make peso-denominated debt investments more attractive, and often lead investors to switch out of equities and into bonds.
Cellphone operator America Movil, the IPC's most heavily weighted stock, was 1.64 percent lower at 20.39 pesos and its American Depositary Receipt (ADR) was off 1.38 percent at $35.66.
Mexico's stock index dipped 0.16 percent for the week, while the peso lost 0.10 percent.
Fixed-line telecommunications leader Telefonos de Mexico (Telmex), which said on Friday it had closed the $400 million acquisition of a 52 percent voting stake in Brazil's long-distance operator Embratel, moved 0.57 percent lower to finish at 17.31 pesos.Its New York-traded shares declined 0.73 percent to $30.11.