Mexico stocks fall on U.S. credit fears; peso slips

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MEXICO CITY, June 26 (Reuters) - Mexican stocks fell on Thursday amid fresh write-down worries in the U.S. banking sector, but slightly better-that-expected housing data in Mexico's chief trading partner helped tame the slide.

The benchmark IPC stock index .MXX fell 0.89 percent to 29,306 points, while the peso <MXN=> MEX01 weakened 0.06 percent to 10.2925 per dollar.

Shares of Citigroup (C.N: Quote, Profile, Research) and Merrill Lynch & Co. (MER.N: Quote, Profile, Research) fell after Goldman Sachs forecast more second-quarter write-downs for the two financial companies and downgraded their stock ratings.

"The markets are nervous again with the bad financial news," one stock trader said.

Bad news in the United States usually bodes poorly for Mexico, which sends more than 80 percent of its exports to its northern neighbor.

But traders said news that the pace of U.S. existing home sales had risen in May helped keep stocks from falling further.

In debt trading, long-term bonds fell for the fourth day in a row. The benchmark government peso bond <MX10YT=RR> fell 0.174 of a point in price to bid 91.006, pushing its yield up 3 basis points to 9.18.

In stock trading, shares of America Movil (AMXL.MX: Quote, Profile, Research), Latin America's biggest cell phone operator, lost 0.73 percent to 27.35 pesos while its New York traded stock (AMX.N: Quote, Profile, Research) shed 1.36 percent to $53.05.

Shares of top retailer Wal-Mart de Mexico (WALMEXV.MX: Quote, Profile, Research) fell 1.11 percent to 40.02 pesos. (Reporting by Michael O'Boyle)