MEXICO CITY--Mexican stocks were gaining early Thursday as investors shrugged off Standard & Poor's Spain downgrade and U.S. equities got a boost from Citigroup's recommendation to buy U.S. stocks.

 

The IPC index of Mexico's most-traded shares was recently up 192 points, or 0.5%, to 41,662 points on volume of 34 million shares traded worth 1.17 billion pesos ($91 million).
The peso was stronger against the U.S. dollar, at MXN12.8755 versus MXN12.9485 at the close Wednesday, according to quotes from information service Infosel.

More broadly, Citigroup's global equity strategy team raised its rating on U.S. equities to overweight, citing "cheap" relative valuations and accommodative central-bank policies. Mexico's manufacturing heavy economy ships 80% of its exports to the U.S.

Also, S&P cut Spain's credit rating two notches to triple-B-minus, the lowest investment-grade rating, citing mounting risks to the country's public finances as a result of rising economic and political pressures.

Mexican brokerage Banorte-Ixe categorized the Spanish sovereign downgrade as having been discounted by the market, while saying that the Thursday equity gains seem somewhat flimsy.

Among Mexican blue chips in early trade, wireless carrier America Movil was up 0.2% to MXN16.72, cement maker Cemex was gaining 2.4% to MXN11.44 and chemicals maker Mexichem was advancing 1.6% to MXN62.84.

Mexichem priced shares Wednesday in a capital increase to raise up to $1.2 billion that the company plans to use to finance expansion projects. Including overallotments, the share sale represents 12.4% of the company.

Among decliners, brewer Grupo Modelo was sliding 0.3% to MXN115.15 on reports that U.S. authorities might block Anheuser-Busch InBev's planned acquisition of the company. Global brewer AB InBev offered $9.15-per-share in June to buy out the half of Modelo that it doesn't already own.

Source: The Wall Street Journal
Written by: Amy Guthrie