Argentine stocks, bonds plunge on pension reform plans

martes 21 de octubre de 2008 16:19 ARST

(Updates stocks and bonds, adds closing peso price)

BUENOS AIRES Oct 21 (Reuters) - Argentine stocks and bonds fell sharply on Tuesday in anticipation of a government proposal to take over almost $30 billion in private pension funds, key players in the country's capital markets.

But the peso currency closed slightly stronger in interbank trade, which traders attributed to the Central Bank's injection of $300 million into the market. The Central Bank declined to provide a figure.

The MerVal stocks index .MERV dived 11.1 percent to 1045 points in afternoon trade, coming back somewhat from an earlier plunge of 13.8 percent.

Pampa Energia PAM.BA, the country's biggest integrated energy company, was off 31.8 percent to 0.253 pesos per share. Pampa is weighted as 9.1 percent of the Merval.

Major Argentine telephone company Telecom (TEC2.BA: Cotización) TEO.N tumbled 20.43 percent to 5.45 pesos per share.

Government bond prices dropped an average 6 percent in local trade, led by an 11 percent slide in the dollar-denominated Discount bond ARDISCD=RASL, and a 7.5 percent drop in the Boden 2014 ARBODEN14D=RASL.

Argentine President Cristina Fernandez is expected to announce on Tuesday evening a plan to take over private pension administrators. Critics say the government wants to get its hands on extra funds ahead of a tough budget year.

"The announcements about the end of the AFJP were not benevolent for the market since investors started to sell bonds and stocks to take positions in dollars," said a foreign currency trader.

In interbank trade, where the Central Bank intervenes to manage the currency value, the peso rose 0.31 percent to close at 3.2100/3.2125 per dollar ARS=RASL.

In informal trade between foreign exchange houses, as measured by Reuters, the peso weakened by 0.30 percent to 3.2950/3.3000 per dollar ARSB=. (Reporting by Walter Bianchi and Jorge Ortaola, writing by Fiona Ortiz; Editing by Kenneth Barry)