September 4, 2008 / 8:38 PM / 12 years ago

Argentine stocks, bonds sink amid widespread slump

(Updates with closing price for stocks; peso, bonds)

BUENOS AIRES, Sept 4 (Reuters) - Argentine stocks closed down 3.6 percent on Thursday at their lowest level since October 2006, tracking steep losses in regional markets after weak jobs data was reported in the United States.

The benchmark MerVal .MERV index ended at 1,694.60, mirroring the percentage drop in Brazilian stocks .BVSP and accumulating a loss of 21 percent since the start of the year.

Meanwhile, the Dow Jones industrial average .DJI was down nearly 3 percent.

“The MerVal kept following the external trend downward in a complicated international context, with more signals of a cooling of the U.S. economy affecting commodities prices,” said Mariano Tavelli, a trader at Tavelli & Company brokerage.

Trade volume on the broad market was a weak $13 million. Of active shares, 11 advanced, 75 declined, and 16 were flat.

On the local debt market, Argentine bonds <AR/BONOS> closed down 1 percent on average in over-the-counter trade, showing a government announcement this week that it will pay off its $6.7 billion defaulted debt to the Paris Club was not enough to ease investor worries over Argentina’s fiscal health, traders said.

The worst losses were seen in the dollar-denominated Boden 2014s ARBODEN14D=RASL, which fell 5.27 percent, according to the bid price.

Argentine debt spreads over U.S. Treasuries, considered a key measure of risk aversion, widened by 24 basis points to 722 basis points at 2030 GMT, according to the benchmark JPMorgan EMBI+ index 11EMJ .JPEMBIPLUS.

The peso ended mixed, firming 0.08 percent to 3.0350/3.0375 per dollar ARS=RASL in interbank trade thanks to central bank intervention to bolster the currency, traders said.

At the same time, the peso weakened by the same percentage to 3.0725/3.0750 ARSB= in informal trade between foreign exchange houses, as measured by Reuters. (Reporting by Jorge Otaola and Walter Bianchi; Writing by Hilary Burke, Editing by Chizu Nomiyama)

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