MEXICO CITY (AP) _ The peso plunged 8 percent Thursday in one of the biggest single-day falls of Mexico's economic crisis, hurtling toward its all-time low in a nervous selloff over bad financial news and political tensions.

Investor anxiety over the currency's erosion also spilled into the stock market, where prices fell sharply and pulled down the key Mexican Bolsa index by 3.4 percent. The nervousness also spread north to Wall Street, where the Dow Jones average dropped 70 points in the afternoon.

A leading bank, Banamex, was trading the peso at a rate of 7.135 at about midday. The Mexican currency had closed at 6.785 Wednesday.

The peso last closed lower than Thursday's figure at 7.15 on March 16.

The peso's lowest close ever was 7.45 to the dollar on March 9, a few hours before the United States and other lenders announced an emergency support plan.

Analysts said traders were concerned by worse-than-expected inflation figures, a drop in international reserves and guerrilla reaction to the arrest of a suspected rebel leader over the weekend.

Some also said the peso was indirectly hurt by news today that President Boris Yeltsin of Russia had been rushed to hospital with a possible heart attack. That caused insecurity among investors, who began turning to dollars.

In Mexico, the Zapatista National Liberation Army declared a military alert on Wednesday. The rebels accused the government of carrying out peace talks in bad faith because of the arrest in Mexico City of Fernando Yanez. The government says Yanez is a top Zapatista leader known as ``Comandante German.''

There has been no actual fighting since January 1994, though peace talks have been intermittent and halting.