BUENOS AIRES, Feb 20 (Reuters) - Record oil prices pushed Argentine stocks to a two-week high on Wednesday and the peso strengthened after a surprise sale of dollars by the central bank, which normally buys dollars to stop the peso rising.
The benchmark MerVal index .MERV closed 0.57 percent higher at 2,074.7 points, reversing early session losses. Broad market volume was low at $26.3 million and of active issues 32 advanced, 26 declined and 21 were unchanged.
Record-high oil prices gave market heavyweight Tenaris (TENA.BA) a 4.0 percent boost to 63.5 pesos per share. Tenaris makes steel pipes for the oil industry.
"The rise in oil drove Tenaris and Petrobras higher," said Juan Diedrich, trader at Capital Markets Brokers.
Government debt prices fell 0.7 percent on average in local trade, led by a 2.3 percent slump in dollar-denominated Par bonds in over-the-counter trade. Institutional investors were selling Argentine debt as expectations for further aggressive U.S. interest rate cuts faded.
The peso closed up 0.08 percent at 3.1500/3.1525 per dollar ARS=RASL after the central bank injected dollars to counteract demand for foreign currency from Argentines who fear a U.S. recession and inflationary pressures in Argentina.
The U.S. dollar is the traditional refuge for Argentines fearing economic volatility and remains so despite its weakness compared with other major world currencies.
"The fall of the dollar was because of the Central (bank), and it left prices at the very bottom of estimates by market players, who were disoriented since they didn't expect the intervention," said Fernando Izzo, analyst with ABC Mercado de Cambios in Buenos Aires.
However, in informal trade between foreign exchange houses, as measured by Reuters, the peso weakened 0.24 percent to close at 3.1800/3.1825 per dollar ARSB=. The central bank does not operate directly in the informal market. (Reporting by Jorge Otaola and Walter Bianchi; Writing by Fiona Ortiz; Editing by James Dalgleish)