Mexico Bank Group Pulls Stock Offer : Finance: The market’s recent fall apparently scared foreign investors away from Banacci.

Mexico’s tumbling stock market claimed its first victim Thursday as the country’s premier financial group withdrew a stock offer that had been expected to raise more than $1.5 billion on international markets.

Banamex-Accival financial group--the holding company that owns Mexico’s largest bank, biggest brokerage and other financial service companies--decided not to go through with the offer, which would have been the biggest Mexican placement since the government sold its stock in the telephone company a year ago.

“This marks a turning point,” said economist Rogelio Ramirez de la O. “It means there is no more money for Mexico on international capital markets. It is a setback, a break in what has been rapid access for Mexico to capital markets.”

Mexican officials will need to find other ways to attract and retain foreign capital, probably by raising interest rates, which will slow economic growth, he said.

No official reason was given for the withdrawal, but a spokesman for Banacci, as the company is known, noted that “given market conditions, the reason is obvious.”

After moderate rallies in Tokyo and London, international markets were declining again when U.S. trading closed Thursday.

Mexico’s Bolsa index has fallen nearly 15% since June 12, despite a concerted effort by the government and private sector to calm international markets’ unease about Mexican issues.

Carlos Slim, chairman of Telefonos de Mexico--the telephone company that accounts for nearly a third of the Bolsa index and which is blamed for triggering the drop--tried to reassure foreign investors in a teleconference Tuesday.

President Carlos Salinas de Gortari met foreign institutional investors for breakfast the same day in Mexico City. And Finance Minister Pedro Aspe Armella joined Banacci Chairman Roberto Hernandez in meetings with U.S. institutional investors in New York to try to save the financial group’s offering.

The announcement of the withdrawal seemed more effective in calming the market than any of those efforts. After dropping more than 3% at noon, the Bolsa index recovered to wind up with a net loss of only 1% for the day.

“Going ahead would have sent a bad signal, because they would have been forced to accept a price cut,” said Ramirez de la O.

By withdrawing, Banacci may have helped stocks generally by sending a signal that the once seemingly unlimited supply of new Mexican paper pouring into the market has finally dried up.

The decision to withdraw also showed that Banacci is not as desperate for capital as some brokers believed. The money raised was to have been used to strengthen the capital base of Banamex, the group’s bank, permitting more aggressive expansion.

Mexican officials are said to be considering a system for controlling the pace of Mexican offerings on international markets in the belief that one factor behind the Bolsa’s plunge is a glut of Mexican stocks on them.

But Ramirez de la O said new Mexican offerings are unlikely until the existing market has consolidated and doubts about the proposed U.S.-Canada-Mexico free-trade agreement are resolved.

That could cause wider economic concerns because the foreign funds used to buy Mexican stocks have offset the country’s growing trade deficit. Higher interest rates and slower growth could result.