Argentine markets slip on investor risk aversion

miércoles 8 de octubre de 2008 14:46 ART

BUENOS AIRES Oct 8 (Reuters) - Argentine bonds and stocks fell on Wednesday as investors ditched riskier assets, while the peso extended its losses as local savers and companies opted for safe-haven dollars due to the global economic turmoil.

The MerVal index of leading shares .MERV was down 3.1 percent at 1,341.51 in early afternoon trade, at a three-year-low.

"In Buenos Aires, we're seeing prices that reflect investor panic and not the true value of the companies," said Francisco Marra, a trader at Bull Markets Brokers.

In informal trade between foreign exchange houses, as measured by Reuters, the peso weakened 1.2 percent to 3.34/3.36 per U.S. dollar ARSB=, at its lowest level in more than 5-1/2 years.

The peso shed 2.39 percent on Tuesday in the informal sector, taking its losses since the start of the year to 4.65 percent.

In formal trade between banks ARS=RASL the peso was trading down 0.23 percent at 3.2225/3.225 per dollar. The central bank intervenes in the interbank market to avoid abrupt movements in the value of the currency.

Argentine bonds were down 3.2 percent on average in over-the-counter trade due to a fresh bout of selling riskier emerging-market assets, extending the average 2 percent loss racked up in the prior session.

Peso-denominated Par bonds were among the hardest hit, down 5.1 percent according to the ask price.

Argentina's debt spread over similar U.S. Treasuries widened 32 basis points to 1,264 on the JPMorgan Emerging Markets Bond Index Plus (EMBI+) 11EMJ. (Reporting by Walter Bianchi; Writing by Helen Popper)