960427

Mexico stocks

lose ground on

profit-taking

MEXICO CITY: Mexican stocks fell on Friday as investors took profits and market heavyweight Telefonos de Mexico tumbled on worries about upcoming competition.

The market's IPC index lost 22.05 points, or 0.68 percent, to close at 3,216.96. On the week, the market lost 67.52 points, or 2.05 percent.

"In the morning, we were up on Telmex, on news that the government set interconnection rates which looked favourable to it, but then profit-taking set in and dragged everything down," said one Mexico City analyst.

Analysts welcomed the profit-taking as a healthy breather for the stock market, which has piled on gains in recent weeks amid growing optimism about Mexico's economy.

"We are in a holding pattern that seems healthy to me. Traditionally, people take profits during earnings season to digest the news," said Gerardo Copca, director of analysis at Valores Finamex.

Copca said the market could turn up if domestic interest rates fall again next week. However, many people are unsure if rates can fall given current inflation and a strong peso. Volume totalled 113.83 million shares.

Telmex L shares fell 28 centavos (four cents) to 13.12 pesos ($1.77) following news the government set rates that the phone giant can charge its competition when its monopoly expires in 1997.

Telecoms firm Iusacell L shares led market gainers by rising 70 centavos (nine cents) to 9.8 pesos ($1.32).

Dealers said the firm has gained in the past few days after news part-owner Bell Atlantic was hooking up with fellow U.S. phone company NYNEX Corp.-Reuter