Mexico's peso, stocks rebound from Dubai losses

* Peso, stocks rebound as Dubai worries ease

* Mexican currency seen extending gains in coming week

MEXICO CITY, Nov 27 (Reuters) - Mexico's peso firmed on Friday and stocks jumped as worries eased about the exposure of major global banks to Dubai's debt troubles.

The peso MXN= MEX01 firmed 0.27 percent to 12.9449 per U.S. dollar while the IPC stock index .MXX closed up 1.08 percent to 30,775.45, rebounding after sinking by the most in a month in the previous session.

Markets around the world fell on Thursday when a possible debt default at a Dubai state-owned conglomerate sparked fears of renewed financial turmoil, but European and Latin American stocks snapped back on Friday.

"It appears the problem is very contained. Today, the markets are responding to this feeling and remembering that the Mexico story is more tied to the United States," said Luis Flores, an economist at brokerage IXE in Mexico City.

The yield on the government's benchmark 10-year peso bond MX10YT=RR bid down 1 basis points to 7.87 percent as Dubai's problems were seen as limited to the country and not indicating any general risks in emerging markets, traders said.

The Dubai jitters had cut into the peso's gains since Monday, when Fitch Ratings downgraded Mexico's debt rating, but put the country on a stable outlook, easing fears of further ratings cuts by the agency.

The downgrade was priced in by the market, which had made the peso the laggard of emerging markets during this year's rebound from the March lows hit in the credit crisis.