950817

Mexican stocks end lower

MEXICO CITY: Mexican stocks ended lower in heavy trade but managed to stay above the key 2,500 level despite news that the Mexican economy tumbled 10.5 percent during the second quarter, traders said.

The main IPC index fell 20.01 points, or 0.79 percent, to 2,502.63 -- its market resistance levels.

Turnover was huge at 154.4 million shares.

News of the reeling economy washed out what was positive market sentiment that sales would begin to pick up by year's end, analysts said.

"The domestic economy is much worse than people thought and Mexico is not going to be able to export its way out of this," Dave Rosen, a U.S. analyst who tracks emerging markets, told Reuters.

The sharp fall in GDP will likely change investors' forecasts for the third quarter and prompt continued selling of Mexican equity, Rosen said.

But some said the market defended its recent gains remarkably well. One trader said "2,500 points seems to be strong support."

Others said the news will likely prompt the government to begin tilting its economic program more towards growth and away from inflation-fighting.

Decliners beat gainers by a 49-28 margin.

Analysts said retialers and financial groups were the worst hit during the day. A weaker economy would take its toll on consumer demand and affect consumers' ability to pay off debt. Retailer Cifra A slipped 4.26 percent and financial group GFB B fell 3.89 percent.

A notable gainer was carrier Aeromex CPO, up 8.89 percent.

The blue-chip INMEX index ended down 1.98 points at 170.66.-Reuter