Argentine markets jittery as farm strike resumes

jueves 8 de mayo de 2008 17:44 ART

BUENOS AIRES May 8 (Reuters) - Argentina's peso sank close to its weakest levels in five years in informal trade on Thursday due to political uncertainty over a farm strike, while bargain-hunting helped bonds and stocks to eke out gains.

Farmers lined highways across the country in fresh anti-government protests after weeks of tense talks with officials failed to find agreement on a sliding-scale of grains export taxes that triggered a three-week farm strike in March.

Jitters over the conflict fueled safe-haven U.S. dollar purchases, sending the Argentine peso lower. In informal trade between foreign exchange houses, as measured by Reuters, it depreciated by 0.31 percent to 3.2525/3.255 per dollar <ARSB=.

The currency closed at a similar level on April 25, when it dipped to its weakest level since January 2003 following the resignation of former Economy Minister Martin Lousteau.

"Due to the logical demand caused by the lack of a solution in the farming conflict, the sale of dollars by exporters alone was not enough to supply buyers," said Fernando Izzo, an analyst at the ABC foreign exchange house.

In formal interbank trade, where the central bank routinely intervenes to keep the peso stable and weak, the peso firmed 0.16 percent to 3.1775/3.18 per dollar ARS=RASL.

Fresh farming protests also fueled investor caution in the debt market, although locally traded bonds <AR/BONOS> eked out an average gain of 0.2 percent amid sporadic bargain-hunting.

Dollar-denominated Par debt, which plunged 3 percent in the prior session, led the session's winners with a 1.2 percent gain in over-the-counter trade.

But the bargain-hunting was lack luster. "Despite very attractive bond prices, the buyers aren't showing up because caution rules," one trader said.   Continuación...