Mexico peso, stocks sink on U.S. recovery doubts

(Recasts throughout, adds comment, share and debt movement)

MEXICO CITY, Oct 30 (Reuters) - Mexico's peso sank on Friday and stocks fell after U.S. consumer sentiment slipped this month, undermining confidence in the strength of the recovery in the United States, Mexico's top trading partner

The peso MXN= MEX01 lost 1.25 percent to 13.24 per U.S. dollar while the IPC stock index .MXX shed 2.92 percent to 28,397, putting the index on track to notch its first monthly decline since February.

The Reuters/University of Michigan Surveys of Consumers said its final index of sentiment for October slipped to 70.6 from 73.5 in September.

A separate report showed U.S. consumers cut spending in September in the largest drop since December.

"What is being seen it that the economy could grow at very low rates," said Ricardo Aguilar, an analyst at Invex brokerage in Mexico City.

Mexico is counting on a rebound in the United States, the destination for more than 80 percent of Mexican exports, to fuel its own recovery from a deep recession.

The government's benchmark 10-year peso bond MX10YT=RR bid up 4 basis points to yield 8.06 percent.

Mexican Senate committees approved a watered-down version of President Felipe Calderon's proposal to raise consumption taxes in order to reduce Mexico's dependence on its waning oil industry. [ID:N30396516]