(Recasts with closing prices)
BUENOS AIRES, Sept 18 (Reuters) - Argentine stocks ended higher on Thursday after a volatile session, reversing earlier losses on reports the U.S. government was considering a broad rescue plan for the financial sector.
Bonds also rose but the peso currency weakened further against the dollar.
The MerVal .MERV index of leading stocks ended up 1.07 percent at 1,508.07 after sinking by as much as 3.93 percent earlier as it tracked the jittery mood in global markets.
The MerVal has fallen by about 15 percent since the start of the month and 30 percent since Jan. 1. Trade volume on Thursday was a moderate $40.2 million and of active shares, 60 retreated, 39 advanced and 15 were unchanged.
"More measures to restore trust in the U.S. financial system allowed for the Dow Jones (industrial average) to shoot up, and helped the MerVal reverse its losses," said Leopoldo Olivari, a trader at Bacque brokerage.
Leading gains, Argentine banking conglomerate Grupo Financiero Galicia (GFG.BA) saw its share price jump 8 percent to 1.21 pesos.
Meanwhile, Argentina's sovereign debt closed up 2.1 percent on average in over-the-counter trade in Buenos Aires, after seeing its gains shrink to about 0.8 percent earlier in the session.
Gains were led by the Discount bond denominated in dollars ARDISCD=RASL, which jumped 4.4 percent according to the bid price. The Discount bond in pesos ARDISCP=RASL rose 1.7 percent.
The Argentine peso ended near four-month lows due to persistent demand for safe-haven greenbacks, but traders said dollar sales by the central bank prevented the peso from weakening further.
The peso slipped 0.48 percent to 3.1175/3.12 per dollar ARS=RASL in formal interbank trade, where the central bank regularly intervenes.
In informal trade between foreign exchange houses, as measured by Reuters, it traded 0.78 percent weaker to end at 3.195/3.20 per dollar ARSB=. (Reporting by Jorge Otaola and Walter Bianchi; Writing by Helen Popper and Hilary Burke; Editing by Leslie Adler)