BUENOS AIRES, Aug 14 (Reuters) - Argentine stocks fell on Thursday on profit-taking, while government buying kept bonds higher despite a decision by Moody's to revise the country's credit outlook downwards, traders said.
The benchmark MerVal stocks index .MERV deepened its losses after the ratings agency's announcement, closing down 0.28 percent at 1,737.94 points after Wednesday's gain of 2.73 percent.
Moody's revised its sovereign credit rating outlook for Latin America's No. 3 economy to stable from positive, citing "political volatility."
"The MerVal was characterized by profit-taking and thin trade as options expired," said Ruben Pascuali, a trader at the Mayoral brokerage. "After yesterday's rebound, a price correction was expected," he added.
Trade volume on the overall market was a meager $19 million. Of active shares, 39 fell, 30 rose and 17 were unchanged.
Argentine bonds traded on the domestic market trimmed gains after Moody's revised its outlook, but still ended up 0.8 percent on average in over-the-counter trade, down from 1.2 percent earlier in the day.
Among the most volatile papers were dollar-denominated 2014 Boden bonds ARBODEN14D=RASL, which closed with a 3.2 percent gain after shedding as much as 1.8 percent earlier in the day.
The government has been buying back bonds since the start of the week in a bid to stabilize prices that plunged last week due to concern over the country's financing outlook.
On the foreign exchange market, the peso held steady due to dollar purchases by the central bank, traders said.
In formal interbank trade, where the central bank regularly intervenes to stabilize the local currency, the peso closed unchanged at 3.0275/3.03 per dollar.
In informal trade between foreign exchange houses, as measured by Reuters, the peso shed just 0.08 percent to end at 3.08/3.0825 per dollar. (Reporting by Walter Bianchi and Jorge Otaola; Writing by Helen Popper; Editing by Leslie Adler)