By Carla Mozee

Major Latin American stock markets rose Wednesday, with Mexican equities starting the second quarter on strong footing as the country said it will seek access to credit from the International Monetary Fund.

Mexico's IPC index gained 1.3% to 19,880.37, with shares of home builder Homex (HXM) leading advancers with a rise of 6.6%.

The Mexican government on Wednesday said it will apply for access to a one-year, $47 billion line of credit from the International Monetary Fund, which, under a new flexible credit line, extends funding to countries with solid economic policies that are facing short-term liquidity hurdles.

Mexico's Finance Minister Agustin Carstens reportedly said in London that Mexico's move is a precautionary one that will give it access to funding if necessary. The move comes as Bank of Mexico looks set to use a currency-swap facility of $30 billion with the U.S. Federal Reserve.

IMF managing director Dominique Strauss-Kahn said in a statement that he believes that Mexico is "an excellent candidate to pioneer this new facility" and that he will move quickly in seeking board approval.

Barclays Capital Research said it expects positive market momentum on the development to continue.

"First, the line should dispel concerns about the country's ability to face the mounting fiscal and external challenges of the current and next year," said Latin American economists Roberto Melzi and Jimena Zuniga at Barclays in a note Wednesday.

"Second, given that the line is oriented toward countries with a solid macroeconomic framework, the 'stigma' traditionally associated with tapping IMF funds has virtually been converted into a 'seal of approval,'" they said.

The currency eased from earlier gains, recently trading at 13.902 pesos against the U.S. dollar, from 13.815 on Tuesday.

Mexico's action are driven by the country's desire to avoid further devaluation of its currency and thus "to send a strong signal to markets that Bank of Mexico is capable of defending its currency," wrote Allyson Benton, Latin America analyst at political risk-consultancy firm Eurasia Group. The central bank currently has $79 billion in reserves.

But Mexico isn't likely to use the funds to directly finance companies with liquidity crises on their hands, including cement giant Cemex (CX), said Benton.

The government "will continue to encourage companies to reach agreements with their international lenders and, if necessary, rely on the nation's development banks, in consortium with domestic commercial banks, to restructure corporate debt if these negotiations fail," she said.

Shares of Cemex ended 4.4% higher, among the strongest performers on the IPC index. Market heavyweight America Movil (AMX) rose 1.1% and retailer Wal-Mart de Mexico (WMMVY) picked up 2.5%.

The market was also aided by gains on Wall Street, where stocks turned around earlier losses after a slightly better-than-expected reading on manufacturing activity, raising optimism for improved U.S. economic conditions. The S&P 500 Index (SPX) rose 1.7% and the Dow Jones Industrial Average (DJI) erased a triple-digit drop to end 2% higher.

Brazil higher; Merval up on first day of new lineup

Brazilian stocks also found support from the surge on Wall Street. Equities had declined after a report that industrial production in Brazil rose 1.8% in February, compared with January. Analysts polled by Dow Jones Newswires were looking for growth of 2.2%.

Shares of Petrobras (PBR) rose 3%, helping to pull the Bovespa index up 2.6% to 41,976.33.

Stock in Companhia Vale do Rio Doce (RIO) rose 1.1%. Citigroup on Wednesday noted that the mining giant is among two Brazilian companies on its list of top Latin American investment ideas. The other is Totsv SA, a software maker.

Citigroup removed brewer AmBev from the list in favor of Mexican beverage maker Coca-Cola Femsa (KOF). AmBev (ABV) shares finished 2.4% higher.

Banking stocks also advanced. Itau-Unibanco (ITU), which was created by the merger late last year of Itau and Unibanco, rose 1.6%.

Shares of rival bank Bradesco (BBD) gained 2.9%, and federally run Banco do Brasil surged 5.8% after the bank was allowed to delay the free float of its shares until June 2011 from this coming June, according to Dow Jones Newswires.

Argentina's Merval rose 0.6% to 1,113.38 under its new lineup of 11 companies. It had carried 14 companies in the first quarter.

Shares of Tenaris (TS) rose 1.7%. The weighting for the Luxembourg-based maker of steel tubes for the oil industry on the Merval is now 46%, up from 35% in the first quarter.

Buenos Aires-listed shares of Petrobras finished 4.6%. Their weighting on the benchmark is about 14%.

The three companies now off of the Merval are aluminum company Aluar, food exporter Molinos Rio de la Plata, and Mirgor, a producer of climate control systems for vehicles.

Next week, the first preview of the May rebalancing of the Bovespa index is expected, according to a note earlier this week from UBS Pactual.