Argentine stocks fall on bank shares; peso gains

viernes 30 de mayo de 2008 18:27 ART

BUENOS AIRES May 30 (Reuters) - Argentine stocks slipped on Friday as investors worried about a prolonged standoff between the government and farmers angry over a hike in export taxes.

The benchmark MerVal index .MERV shed 0.81 percent to 2,205.72 points, finishing the month with a 5.26 percent gain and up 2.51 percent since Jan. 1.

Banking shares led losers as Banco Frances (FRA.BA: Cotización) closed down 5.74 percent to 6.41 pesos and leading Argentine banking conglomerate Grupo Financiero Galicia (GFG.BA: Cotización) fell 4.81 percent to 1.78 pesos.

Shares in Argentine banks, which are obligated to hold government debt, have been hit in recent weeks over uncertainty surrounding the farm conflict. Farmers went back on strike for a third time in as many weeks on Wednesday until June 2.

"Investor sentiment continues to be impacted," said Dionisio Corneille, head of the brokerage that carries his name.

Volume on the broad stock market in Buenos Aires was a moderate $41.1 million and active issues showed 37 gainers, 41 losers and 11 unchanged.

The government and the powerful agricultural sector have been locked in a standoff for more than two months over soy export taxes. Farm protests and interruptions to grains exports have sparked concerns for the economy and political stability.

The peso rose 0.4 percent to 3.0975/3.10 per dollar in formal interbank trade ARS=RASL. That was the strongest level for the interbank peso since July 2007. In informal trade between foreign exchange houses, as measured by Reuters, the peso gained 0.4 percent to 3.18/3.1825 per dollar ARSB=.

The central bank had been selling dollars on the foreign exchange market in recent weeks, to counteract ballooning demand for dollars due to investor anxiety over the farm conflict.

Traders said private banks began unwinding dollar positions that had been losing value under the central bank's policy of providing dollars to the market to keep the peso in a tight range. (Reporting by Jorge Otaola, writing by Kevin Gray; Editing by Leslie Adler)