June 6, 2008 / 8:52 PM / 12 years ago

Argentine stocks drop, but oil firms cushion fall

BUENOS AIRES, June 6 (Reuters) - Argentine stocks dropped on Friday under the influence of Wall Street, where unemployment and record-high oil prices battered markets, and local bond prices were damaged by political uncertainty.

The benchmark MerVal stocks index .MERV lost 0.45 percent to 2,179.72 points.

On the broad market, volume was moderate at $25 million. Of active issues 17 advanced, 55 declined and 13 were unchanged.

Grupo Financiero Galicia GFG.BA, which owns the country’s largest bank, slumped 4.49 percent to 1.7 pesos per share, largely due to falling prices for Argentine bonds. Local banks are required to hold large government debt positions.

“The session was affected by the brutal landslide of the Dow Jones, but the MerVal didn’t show the whole story at the close thanks to oil companies that cushioned losses,” said Leopoldo Olivari, trader with Bacque brokerage.

Petrobras Energia Participaciones PCH.BA, the Argentine arm of Brazilian state energy firm Petrobras, jumped 3.59 percent to 4.33 pesos per share as oil zoomed nearly 9 percent higher to a record $139 a barrel.

In New York, the Dow Jones industrial average .DJI ended down nearly 400 points, or more than 3 percent.

Government debt traded locally shed an average 0.8 percent, led by a 2.4 percent fall in the peso-denominated Discount bond.

“The (bond) market is still being hit by political uncertainty created around the long farm conflict,” said one trader.

Argentine farmers, angry over higher taxes on their biggest crop, soy, are holding their third major protest in almost three months, holding back grains from markets.

The peso weakened slightly as the Central Bank mostly stayed out of the market where it regularly intervenes. In formal interbank trade, the peso slipped 0.16 percent to close at 3.0675/3.0700 per dollar ARS=RASL.

In informal trade between foreign exchange houses, as measured by Reuters, the peso closed at 3.1500/3.1550 per dollar ARSB=, just slightly down from a day earlier. (Reporting by Walter Bianchi and Jorge Otaola, writing by Fiona Ortiz; Editing by Jonathan Oatis)

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