Argentine stocks flat, bonds down in thin trade

miércoles 3 de septiembre de 2008 18:24 ART

BUENOS AIRES, Sept 3 (Reuters) - Argentine stocks closed flat on Wednesday amid investor caution, and bonds fell, a day after the government announced it would pay off $6.7 billion in defaulted debt to the Paris Club of creditor nations.

The benchmark MerVal .MERV index closed just 0.01 percent higher at 1,758.13 points.

Trade volume on the broad market was a weak $10.7 million. Of active shares, 29 advanced, 25 declined, and 16 were unchanged.

"The lack of volume worked to the MerVal's advantage, leading to a steady close instead of the corrections seen in other regional markets," said Augusto Farina, a trader at Amirante Galitis brokerage, referring to losses in Brazilian and Mexican stocks.

"The government did something the markets wanted by paying the Paris Club. Now it'll have to take further steps to attract the liquidity that's missing," he added.

Argentina's government plans to tap the central bank's foreign currency reserves to pay off the Paris Club debt, which has been in default since a 2001-02 economic crisis.

Argentine business leaders applauded the move because it shows a willingness to pay and is seen improving access to credit for local projects. But many analysts felt the move did little to dispel doubts about high inflation and hefty government spending, as commodities prices retreat.

In the local debt market, Argentine bonds <AR/BONOS> closed down 1 percent on average in over-the-counter trade as institutional investors sold off paper amid thin volume and persistent concerns about Argentina's financing outlook.

The worst losses were seen in the dollar-denominated Boden 2014s, which fell 2.2 percent, according to the ask price.   Continuación...