UPDATE 1-Mexico consumer confidence falls in October

MEXICO CITY, Nov 5 (Reuters) - Mexico's consumer confidence index fell sharply in October to its lowest level on record, knocking some of the wind out of the view that Mexico's economy is emerging from a deep recession. The index fell to 77.0 in October, the national statistics agency said on Thursday. It was the lowest reading since the index was first published in 2001, and well below the median average of estimates in a Reuters poll at 81.4. Mexico's government and central bank say the economy returned to growth during the third quarter after a year-long recession, and manufacturing indexes have been pointing to future growth for several months. But even the government does not expect growth to be anywhere near enough to make up for the steep fall in output earlier this year caused by a fall in U.S. demand for Mexican exports. The government expects the economy will contract nearly 7 percent this year and then grow by about 3 percent next year. The fall in confidence in October came as Mexico's Congress discussed a plan to raise taxes. (Reporting by Jason Lange; Editing by Dan Grebler) Keywords: MEXICO ECONOMY/ ([e-mail]; [phone]; Reuters Messaging: [e-mail]) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved.

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