Mexico's Stocks Open Higher, Peso Stronger Against Dollar

MEXICO CITY --Mexican stocks opened higher Friday in light trading, and the peso gained ground against the U.S. dollar.

The stock market's IPC index of leading issues was up 0.4% at 29,441.85 points, adding to Thursday's gains which carried the index to its highest close in more than a year.

Volume was 24.1 million shares worth 618.3 million pesos ($46.2 million).

Banking concern Banorte (GFNORTE.MX) O shares were among the leading gainers after Barclays Capital started coverage of the stock at overweight, and naming it top pick among Latin American banks. Barclays cited "the value of Banorte's franchise, scarcity premium, and the long-term prospects of the Mexican banking system." Banorte O shares were up 3.8% at MXN43.20.

Barclays also started microfinance bank Compartamos (COMPART.MX) at overweight. Compartamos O shares were up 1.9% at MXN48.60.

Mining concern Grupo Mexico (GMEXICO.MX) B shares were down 1.2% to MXN22.77 after Vedanta Resources PLC (VED.LN) raised its bid to take U.S. concern Asarco out of bankruptcy proceedings. Grupo Mexico owns Asarco but lost management control after the unit entered Chapter 11 in 2005.

A bankruptcy judge has recommended Grupo Mexico's plan for Asarco, although that decision has to be confirmed by a district judge.

HSBC downgraded Grupo Mexico to neutral from overweight on valuation after the shares rallied following the bankruptcy court's recommendation, while raising its target price to MXN25 from MXN16.

The peso was stronger against the dollar, quoted in Mexico City at MXN13.36 compared with MXN13.3875 at the close Thursday.

BBVA Bancomer said in a report that the peso's slide from recent highs against the dollar was due more to technical than fundamental reasons as the currency had recovered sharply from record lows in March.

"The market has opted to reduce its exposure to the local currency in a context of consolidation of global markets," BBVA Bancomer said.