Argentine peso hits 7-year low; bonds, stocks gain

martes 2 de diciembre de 2008 18:47 ARST

(Updates with closing prices, add stocks and bonds)

BUENOS AIRES Dec 2 (Reuters) - Argentina's interbank peso currency weakened on Tuesday to its lowest against the dollar since a sharp devaluation in early 2002 as savers and companies opted for safe-haven greenbacks.

The benchmark MerVal stock index .MERV rose 2.87 percent to close at 951.79, tracking gains in other markets around the world following Monday's sell-off.

"After yesterday's sharp drop, it was reasonable to expect a price correction within the volatile framework that has returned to the market since the U.S. recession was confirmed," said Claudio Szlaien, an analyst at Marlon Financial Resources.

Telecom Argentina (TEC2.BA: Cotización) (TEO.N: Cotización) led gains, rising 8.38 percent.

On the broad market, volume was a thin $17 million and of active issues, 26 advanced, 20 declined and 13 were unchanged.

Fear of a global recession has raised demand for dollars in Argentina in recent months, leading the central bank to sell hundreds of million of dollars from its foreign reserves to stop the peso from falling more sharply.

However, traders said on Tuesday that although the bank was intervening, it appeared to be allowing the peso to weaken.

"There's a lot of uncertainty and fear (and) faced with so much financial insecurity, people are used to fleeing to the safety of the dollar," said one currency trader.   Continuación...