Argentina stocks rally as bonds lift banking shares

martes 4 de noviembre de 2008 16:38 ARST

(Updates with peso's close)

BUENOS AIRES Nov 4 (Reuters) - Argentina's peso currency rose sharply against the dollar on Tuesday while stocks traded higher as banking stocks rallied thanks to a recovery in sovereign debt prices.

In late afternoon trade, the benchmark MerVal .MERV stocks index was trading up 5.5 percent at 1,115.84 points in its sixth straight session of gains.

"We're seeing investors reshuffling their portfolios and putting banks at the forefront," said Claudio Szlaien, an analyst at Marlon Financial Resources.

Banking sector gainers included Banco Macro BMA.BA, which climbed 5.2 percent and Grupo Financiero Galicia (GFG.BA: Cotización), up 5.3 percent.

Argentine banks are among the biggest holders of government bonds traded on the local market, which were up nearly 4 percent on average. They rose more than 6 percent on Monday.

Local Argentine debt prices fell 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 boosted them in recent sessions.

On the foreign exchange market, the peso closed sharply higher in light trade due to increased control by the Central Bank, including new restrictions on short-term financial operations, traders said.

Under rules announced on Monday, banks must hold onto bonds and stocks for at least three days. The measure aims to curb short-term buying and selling that causes abrupt movements in financial markets and to stem the dollar's rise.   Continuación...