Mexican stocks drop

Mexican stocks fell on Friday as news Venezuela is nationalising its cement industry hit Mexican cement maker Cemex, which has operations there, and on unusually weak US jobs data. The benchmark IPC index fell 0.46 percent to 31,545.37. Losses were offset by mining shares that rose as metals prices gained.
The peso weakened 0.08 percent to 10.568 per dollar at the official central bank close, breaking a six-day winning streak that had carried it to a two-year high. Shares in Cemex, the world's No 3 cement producer, fell 3.87 percent to 27.83 pesos. Its New York traded shares shed 4.22 percent to $26.32.
Venezuelan President Hugo Chavez on Thursday acted on past threats to nationalise the cement industry there, including a subsidiary of Cemex. Research firms believe Chavez's decision will have a mild impact on Cemex's overall results. The news helped turn Mexico's market sour, after the IPC index had risen more than 5 percent over the five sessions through Thursday.
The index approached its all-time peak on Tuesday. "The market is tired, it couldn't break a historic level early in the week, and the news about Cemex was a pretext to book profits," one stock trader said. Traders said data from the US Labour Department showing a third straight month of non-farm job losses also weighed on the Mexican market. The report added to fears that the United States, Mexico's chief trading partner, may be in recession.
Wireless telecom bellwether America Movil dropped 1.68 percent to 34.50 pesos. Offsetting losses, copper miner Grupo Mexico gained 2.59 percent to 75.79 pesos while silver miner Penoles added 2.26 percent to 319.30 pesos.
In debt trading, the price of the benchmark 10-year government peso bond lost 0.209 of a point to bid at 101.635, pushing its yield up 3 basis points to 7.51 percent.
Luis Flores, a fixed-income and currency analyst at Mexico's IXE brokerage, said local fears over inflation were driving losses in bonds. Central Bank Governor Guillermo Ortiz, speaking at an annual banking convention in Acapulco, warned that inflation risks persisted from high food and energy prices.
Peso-denominated assets have been attracting yield hungry investors as bets have increased that the US Federal Reserve will slash its target interest rate again to stimulate the stumbling US economy, further widening the spread between Mexican and US interest rates.