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BUENOS AIRES, Oct 28 (Reuters) - Argentine bond prices retreated for a 10th consecutive session on Wednesday despite government pressures on private pension fund managers to hold onto sovereign debt.
Sovereign bonds traded on the local over-the-counter market dropped an average 1.5 percent in afternoon trade, accumulating a 39 percent drop over the last 10 sessions and shedding 59 percent in the month of October.
Most bonds traded locally are at historic lows, with investors pricing in default fears. The dollar-denominated Par bond was among Tuesday's most liquid ARPARD=RASL, dropping 3.54 percent to an ask price of 17.70.
Traders said investors continued to dump the bonds in a crisis of confidence after the government announced last week it would take over the private pension fund system, possibly drying up liquidity in local markets.
"As long as the conflict over the pension funds continues, bonds will continue weak," said Augusto Farina, trader with Amirante Galitis brokerage.
The head of the state social security agency, which will take over management of the pensions if the takeover is approved by Congress, met on Monday with pension fund administrators and asked them to preserve market liquidity by holding onto sovereign bonds and renewing short-term deposits in local banks when they mature.
The pension fund move by the government has also been read as a desperate measure to stave off default next year, when the government faces rising debt obligations in a context of frozen credit markets.
The benchmark MerVal stocks index .MERV was off 1.5 percent at 826.9 points in afternoon trade.
In the foreign exchange market, the peso ARSB= currency slipped 0.15 percent, to 3.3800/3.3900 per dollar as the central bank continued to pump dollars into the market to meet demand. (Reporting by Jorge Otaola; Writing by Fiona Ortiz; Editing by Dan Grebler)