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MEXICO CITY, May 12 (Reuters) - Mexico's peso weakened on Tuesday, bonds fell and stocks sank after Standard & Poor's revised its outlook on Mexico's credit rating from stable to negative.

The peso <MXN=>MEX01 lost 0.9 percent to 13.264 per dollar at the central bank's final 1:30 p.m. (1830 GMT) reference.

Even though S&P said it was not changing its ratings on any Mexican companies, its warning about the country hurt sentiment on the stock market as it increased the perception of risk in Mexico, traders said.

The IPC stock index .MXX closed down 1.03 percent to 23,696.49 points, weighed down by a 4.8 percent loss at cement maker Cemex, which is struggling to repay a huge debt amid the global downturn in construction.

Cemex's Mexico shares lost 60 centavos to 12.01 pesos, also hurt by recent news that it is facing a trust-busting investigation in Mexico over possible collusion in the construction materials industry.

Standard & Poor's signaled a possible downgrade this year for Mexico's debt on Monday, and a Moody's analyst said his agency could also act soon if the country is unable to contain growing fiscal problems. For more see [ID:nN11378204].

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.

Fitch put Mexico on a negative outlook last November "We do not expect Mexico to be downgraded to junk status in the forthcoming years," Kathryn Rooney, an emerging markets strategist at Bulltick Capital Markets in Miami, wrote in a report.

"That said, as we have argued repeatedly in the past, Brazil will most likely continue to outperform Mexico in the forthcoming quarters in virtually all grounds" -- spreads, growth, foreign exchange rate, Rooney said.

A 'MUCH' WEAKER PESO?

Mexico's government needs to pass fiscal reforms to wean itself from dependence on taxing the state-run oil monopoly, as well as other reforms, such as those in the area of antitrust and looser labor legislation, to make its economy more competitive, analysts said.

"If Mexico fails to reform the adjustment variable should be the peso: a weaker currency would be needed to lower real wages in dollar terms and through it regain some export competitiveness," Goldman Sachs economist Alberto Ramos wrote in a report.

"That is, absent productivity-enhancing reforms a much weaker peso is needed to guarantee domestic and external balance," Ramos wrote.

In debt trading, the government's benchmark 10-year peso bond <MX10YT=RR> lost 0.697 of a point in price, pushing its yield up 10 basis points to 7.80 percent.

The peso recently recovered from steep losses spurred by the swine flu outbreak that further clouded economic prospects for Mexico, but the currency is still trading about one-quarter weaker against the dollar compared to a high last August.

Mexico's Finance Ministry expects the economy to shrink 4.1 percent this year as exports to the United States have collapsed.

The tourism sector is expected to take until December to recover from the stigma of the flu outbreak, cutting dollar flows from international tourism by nearly one-third.