January 9, 2008 / 8:17 PM / 12 years ago

Argentina stocks sink with local Petrobras unit

BUENOS AIRES, Jan 9 (Reuters) - Argentine stocks sank on Wednesday to a four-month closing low, as investors shed the heavily weighted Argentine unit of Brazil state oil company Petrobras after it denied rumors of a pending share buyback.

The MerVal index .MERV of the 42 leading stocks fell 2.39 percent to 2,089.58 points, its lowest level since Sept. 18. On the broad market volume was robust at $48 million. Of active shares, 86 declined, 33 advanced and 14 were unchanged.

The session’s loss leader was Petrobras Energia Participaciones PCH.BA, which plummeted 19.49 percent to close at 4.13 pesos per share.

The stock had surged 38 percent in the last month, buoyed by rumors of a share buyback. The company denied the rumors in a statement on Wednesday.

Petrobras Participaciones is weighted as 5.45 percent of the MerVal.

In central bank-regulated trade between banks, the peso currency inched up 0.08 percent to 3.1700/3.1725 per U.S. dollar ARS=RASL. The central bank continued to keep the peso from strengthening further, by absorbing dollars flowing into the market from agricultural exports, traders said.

In informal trade between foreign exchange houses, as measured by Reuters, the peso strengthened 0.16 percent to 3.1200/3.1500 per dollar ARSB=. (Reporting by Jorge Otaola, Translating by Fiona Ortiz; Editing by Leslie Adler)

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