June 4, 2008 / 9:03 PM / 12 years ago

Argentine stocks sink with crude oil, peso slips

BUENOS AIRES, June 4 (Reuters) - Argentine stocks fell on Wednesday for the fifth straight session, pressured by energy company losses linked to another steep drop in crude oil prices. Meanwhile, the peso slipped and bonds inched higher.

The benchmark Merval stock index .MERV shed 1.85 percent to end at 2,141.25 points.

Losses were fueled by Petrobras Energia Participaciones PCH.BA, which shed 5.5 percent to close at 4.26 pesos per share, and index heavyweight Tenaris TENA.BA (TS.N), which makes steel tubes for the energy industry and whose shares sank 3.9 percent to 94 pesos in Buenos Aires.

“The sharp fall in energy shares was exclusively responsible for the MerVal’s drop,” said Francisco Marra, a trader at Bull Market Brokers.

Volume on the overall market was a moderate $28.6 million.

Argentina’s peso weakened against the dollar after firming for eight straight sessions, as the central bank stopped selling dollars on the currency market.

The peso slipped 0.08 percent to 3.0700/3.0725 per dollar in formal, interbank trade ARS=RASL, and shed 0.4 percent to end at 3.1575/3.1625 per dollar in informal trade between foreign exchange houses, as measured by Reuters ARSB=.

A nearly three-month-long, bitter standoff between the government and farmers has created uncertainty in Argentina and was pressuring the peso lower until the central bank began flooding the market with dollars to reverse the trend.

The bank’s foreign reserves have fallen by nearly $2 billion since hitting a record $50.5 billion in late March.

Government bonds sold locally <AR/BONOS> rose 0.5 percent on average in a selective session in which both state-run and private banks participated. Gains were led by the peso-denominated Discount bond, which jumped 2.4 percent.

“The intervention of the central bank and state-owned banks could continue pushing the bond market higher,” consulting group Portfolio Personal said in a statement. “Nonetheless, we still think this is a market more for short trading than for the long term.” (Reporting by Jorge Otaola and Walter Bianchi; Writing by Hilary Burke)

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