RPT-Argentine bonds rally, stocks climb on bank's gains

lunes 3 de noviembre de 2008 19:11 ARST

(Repeats to correct typo in 10th paragraph)

(Updates with closing prices, adds foreign exchange market)

BUENOS AIRES Nov 3 (Reuters) - Argentine bonds rallied on Monday on buying by bargain-hunters after October's sharp losses, helping to drive stocks higher as banking shares soared.

The local debt market got an added boost after two Argentine newspapers said the government was considering a plan to buy back locally traded bonds as a way to take advantage of low prices.

An Economy Ministry spokesman refused to comment on the reports in El Cronista and Ambito Financiero newspapers, which cited unnamed government sources.

Bonds traded on the local market closed up 6.6 percent on average, with dollar-denominated Disc paper ARDISCP=RASL rising 11.5 percent.

Local Argentine debt prices fell by about 60 percent on average last month because of the global financial crisis and a government plan to take over private pension funds, but bargain-hunting has seen them rise in recent sessions.

Argentine global bond yield spreads over U.S. Treasuries narrowed 213 basis points to 1,574 basis points in afternoon trade on Monday, according to JP Morgan's benchmark Emerging Markets Bond Index Plus (EMB+) 11EMJ.

The recovery of sovereign debt prices also boosted the benchmark MerVal .MERV stocks index. Argentine banks are among the biggest holders of government bonds and they led Monday's rally.   Continuación...