mexico stocks up as hylsamex rallies, peso gains Mexico stocks...

mexico stocks up as hylsamex rallies, peso gains Mexico stocks up as Hylsamex rallies, peso gains
September 9, 2004 5:10pm ET (Reuters)

MEXICO CITY, Sept 9 (Reuters) - Mexican stocks rose for a fourth straight session on Thursday, led by strong gains in steelmaker Hylsamex, and the peso was stable after news that August consumer prices jumped higher than expected.

The IPC benchmark stock index added 0.15 percent to finish at 10,553.41 points.

Mexico's equity market has surged since mid-August, with a gain of nearly 8 percent, but one trader cautioned the rally could be losing steam.

"This rally is like a party," said Luis Antonio, a trader at Vector brokerage. "At first there was a lot of dancing, but now the drunken strangers are showing up and it looks like things could end. Then again, another case of beer could arrive."

Some analysts said the rally was based on forecasts of improved third-quarter corporate earnings.

"We attribute the market's gain to expectations of good company reports," said brokerage Monex.

Hylsamex was among the market's top gainers on Thursday, up 1.16 percent to 20.95 pesos after earlier moving as high as 21.25 pesos.

It was the third straight day of gains for the stock after Hylsamex said it expects a healthy rise in third-quarter earnings before interest, taxes, depreciation and amortization.

Kimberly-Clark de Mexico (Kimber), the country's largest paper-products company, rose 3.43 percent to a new year high of 33.51 pesos after Chief Financial Officer Jorge Lara told Reuters that 2004 net profit would rise some 20 percent.

Lara said in an interview that sales volumes would see a percentage increase in double digits this year based on an improved economy and a push by Kimber into the low price sector.

Dominant Mexican cell phone company America Movil , owned by billionaire businessman Carlos Slim, continued its strong gains this week, rising another 1.61 percent to end at 20.81 pesos. Its American Depositary Receipt (ADR) rose 1.70 percent to $35.90.

In currency trading, the peso was near flat at 11.59 per dollar in late afternoon trade after the central bank said inflation in August was an unexpectedly high 0.62 percent.

The central bank holds its twice-monthly inflation review on Friday, and analysts said the high consumer prices figure makes it more likely the bank will up its inflation fight.

"With this number, the central bank could (tighten monetary policy) at its meeting tomorrow," said Eduardo Avila, an economist at Prognosis consulting company.

Tighter monetary policy tends to force interest rates higher and make peso-denominated debt investments more attractive.