(Adds stocks, government comments on pensions)
BUENOS AIRES, Oct 29 (Reuters) - Argentina's peso recovered after a steep fall in early trade on Wednesday as the central bank stepped in with a massive offer of dollars, while stocks rose and bonds dipped slightly.
Traders said the central bank offered to sell $1 billion in dollars on the foreign exchange market after the peso opened weaker, extending a slide into six-year lows.
"The dollar offer managed to turn around the rise in the dollar price, although almost without trades because just the idea that the Central (Bank) is willing to to do anything changed the mood of the market," said a trader, who asked not to be named.
In formal trade between banks the peso was trading at 3.3675/3.3700 per dollar ARS=RASL, almost flat with Tuesday's close, after weakening to 3.41 in early trade.
Businesses and individuals are continuing to demand dollars that are seen as a safe haven in Argentina, where markets have been tremendously volatile this month.
The peso remained under pressure due to investor concern over a government bid to take over private pension funds and more general jitters over the Argentine economy. The government has asked the funds to stop selling pesos and sovereign debt.
In informal trade between foreign exchange houses, as measured by Reuters, the peso changed hands at 3.4300/3.4500, also almost flat from Tuesday's close ARSB=.
In credit markets on Wednesday, prices for sovereign bonds traded locally fell an average 0.2 percent, in an 11th consecutive session of losses.
The benchmark MerVal stocks index .MERV rose 1.86 percent to 911.73 points in the first half-hour of trade, in tune with rising stock markets in Brazil, Mexico and the United States.
Congress is debating the president's pension nationalization bill.
The head of the state pension program, Amado Boudou, tried to calm markets on Wednesday, repeating assurances that the government will not liquidate private pension funds if it takes them over.
The Pension and Retirement Fund Administrators, known as AFJP, are major biggest players in the local market, and bonds and stocks prices lost a quarter of their value last week as investors fled, fearing liquidity will dry up without the funds.
"The AFJP loan 60 percent of their funds to the government. With new contributions we are going to lower that amount," Boudou said.
He reiterated that the pension funds will sell overseas assets. (Reporting by Walter Bianchi; Writing by Fiona Ortiz, Editing by Chizu Nomiyama)