February 5, 2008 / 9:34 PM / 12 years ago

Argentina stocks slump on U.S. recession fears

BUENOS AIRES, Feb 5 (Reuters) - Argentine stocks fell on Tuesday over renewed fears of an upcoming recession in the world’s leading economy, mirroring global market losses.

The MerVal index .MERV of 42 leading stocks ended down 1.42 percent at 2,054.79 points.

Volume on the broad market was a light $36.7 million with 18 issues advancing, 46 retreating and 15 unchanged.

The highest percentage losers included Buenos Aires-listed stock in Brazil’s Petrobras energy company APBR.BA, with a 6.67 percent drop to 170.8 pesos per share.

“The local market followed the outside markets’ slide,” said Osvaldo Suarez, a broker at the Corneille brokerage.

Fears about a U.S. recession were revived after an announcement of a dramatic drop in activity in the service sector to a level not seen since the last recession in 2001.

On Tuesday the Institute for Supply Management said its U.S. non-manufacturing index fell to 41.9 in January from December’s 54.4, a bigger drop than Wall Street anticipated.

Any reading under 50 signals a contraction of the sector.

“Many factors are pointing toward a possible recession in the United States which would mean a difficult transition for global stock markets,” said a report by brokerage Puente Hermanos.

Bucking the negative trend, shares of energy group Pampa Holding PAM.BA continued to rise, ending 1.66 percent up at 2.45 pesos, due to portfolio adjustments after recent losses.

On the local debt market, Argentine sovereign bonds <AR/BONOS> dropped 1.0 percent on average. The losses were led by dollar-denominated Par bonds, which were down 2.1 percent.

The peso currency ARS=RASL closed 0.16 percent weaker at 3.1625/3.1650 per dollar, in formal interbank trade, where the central bank intervenes.

In informal trade between foreign exchange houses, as measured by Reuters, the peso ARSB= ended down 0.08 percent at 3.1700/3.1725 per dollar. (Reporting by Walter Bianchi; Writing by Gaspard Sebag; Editing by James Dalgleish)

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