Mexican peso weakens on tax reform concerns

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MEXICO CITY, Nov 6 (Reuters) - Mexico's peso was set to close its worst week in a month and a half on Friday, hurt by concerns tax reforms passed last weekend will not be enough to stave off a downgrade of the country's debt.

The peso MXN=MEX01 lost 0.76 percent to trade at 13.3871 per dollar, putting it on track for a more than 1.4 percent slide this week, its worst since late September.

The IPC stock index .MXX rose 0.27 percent to 29,814 after investors read a U.S. unemployment report as a sign the decline in the labor market of Mexico's top trading partner was close to bottoming out.

Stocks were on track to post a more the 4 percent rise this week.

Last weekend, Mexican lawmakers finalized a watered-down version of President Felipe Calderon's fiscal reform package, which aims to raise taxes and help reduce Mexico's dependence on its waning oil industry.

Many analysts say the reforms are not deep enough to satisfy Wall Street ratings agencies that threaten to downgrade Mexico's debt unless the government widens its tax base.

"The interpretation is that the revenue law could result in a downgrade, and foreigners are deciding to put their money elsewhere while the uncertainty continues," said Juan Jose Resendiz, an analyst at Arka brokerage firm in Mexico City.

Standard & Poor's and Fitch Ratings, which both have assigned Mexico a negative outlook, have said they will wait to issue any decisions until lawmakers approve the spending side of the budget, expected later this month.