(Recasts with peso down on S&P outlook)

MEXICO CITY, May 11 (Reuters) - Mexico's peso sank on Monday after Standard & Poor's revised the outlook on Mexico's credit ratings to negative from stable, while stocks fell, hit by losses at cement maker Cemex and bank Inbursa.

The peso MXN=MEX01 lost 0.87 percent from the central bank's final 1:30 p.m. (1830 GMT) reference on Monday to 13.26 per dollar in late afternoon trade. That added to an earlier loss of around 0.5 percent from Friday's central bank reference.

The IPC stock index .MXX lost 0.59 percent to 23,943.02 points as investors booked profits after a week of strong gains. The S&P announcement came after the local stock market had closed.

S&P said Mexico's fiscal and external positions have deteriorated as a result of the global economic downturn. S&P currently rates Mexico at BBB-plus, three notches into investment-grade territory.

Analysts say Mexico's government needs to pass a fiscal reform to wean its dependence on taxing the state-run oil monopoly, as crude production is falling due to declines at the country's major oil fields.

In July, Mexico will hold elections to seat a new lower house of Congress, but the chamber is expected to remain divided between the nation's three main political parties, which could hamper efforts to pass tax reform.

Earlier on Monday, a Moody's Investors Service credit analyst suggested that the credit ratings agency could act on the country's rating soon, but he stressed that Mexico is not at risk of losing its investment-grade status. [nN11294145]

Weighing on Mexican stocks, U.S. equities fell as investors booked profits in financials after a two-month run-up and news of several banks' share offerings heightened worries about the dilutive impact on current shareholders.