27 de octubre de 2008 / 15:26 / en 9 años

Argentine stocks off, peso steady after key meeting

(Recasts with markets open, updates prices)

BUENOS AIRES, Oct 27 (Reuters) - Argentine stocks fell in early trade on Monday but the peso currency and bonds were stable after a government official asked pension fund administrators to refrain from buying dollars and selling bonds when they re-enter the market after a three-day ban.

The peso currency was off just 0.08 percent to 3.2825/3.2850 pesos per dollar ARS=RASL in formal trade between banks. In informal trade between foreign exchange houses, as measured by Reuters, the peso rose 0.7 percent to 3.4000/3.4100 per dollar ARSB=.

“The dollar is going down because of peso needs. But I believe it is a situation specific to this moment since there is still fear in the market,” said one trader.

Government bonds traded locally fell on average less than 1 percent <AR/BONOS> after steep losses last week.

The MerVal index .MERV was off 3.98 percent at 854.83 points, led by an 8 percent drop in steel pipe maker Tenaris (TENA.BA) to 28.6 pesos per share.

National Social Security Administration Director Amado Boudou, who will manage pensions if they are nationalized under a government plan, met with private pension fund managers on Monday and asked them not to buy dollars or sell government bonds.

Argentine markets were devastated last week after the government said it would take over private pension funds holding $30 billion in investments, a move that highlighted institutional weakness and sparked fears that the government was desperate to tap funds to avoid a default.

Last week, the peso ended at a six-year weak point and the benchmark MerVal sank 26 percent. Government bonds traded locally also plummeted 27 percent on average over the week.

Some 55 percent of the private pension system’s funds are invested in Argentina’s sovereign debt, some of it forced placements from the past. Another 11 percent is in local stocks, and the rest is in short-term deposits, foreign assets, and other investments.

Shares in Molinos food processing and grain exporting company MOL.BA shot up more than 12 percent to 8.7 pesos per share after the company said it would buy back up to $136 million in shares at 9 pesos per share.

The local securities regulator last week relaxed rules on company share buybacks as companies asked to be able to support their share prices.

A judge suspended trading by the pension funds last Tuesday afternoon in an investigation of allegations of illegal selling of government bonds but the ban was lifted and the funds were trading again on Monday.

Lawmakers are slated to begin debating on Tuesday the president’s bill to nationalize the private pension funds amid reports that cabinet ministers were pressuring them to vote on it without changing its wording.

Although Fernandez’s Peronist party and a loose coalition of her allies have a majority in the legislature, some lawmakers from her own party are questioning elements of the bill and it could face tough debate.

Reporting by Jorge Otaola and Walter Bianchi; Writing by Fiona Ortiz, Editing by Chizu Nomiyama

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