BUENOS AIRES, May 19 (Reuters) - Argentine stocks jumped on Monday, and the peso currency and bonds firmed as investors hoped farmers and the government would soon end a prolonged conflict over soy export taxes.
The benchmark MerVal index .MERV added 2.67 percent to 2,194.11 points. On the broad market, volume was brisk at $35 million. Of active issues, 59 advanced, 16 declined and nine ended unchanged.
Shares in Grupo Financiero Galicia GFG.BA, which controls Argentina’s biggest bank, soared 6.0 percent to 1.93 pesos per share.
“The Merval focused on growing expectations regarding talks between the agricultural sector and the government. This expectation especially favored government debt and bank shares,” said Francisco Marra, analyst with Bull Markets Brokers in Buenos Aires.
The farm strike has hammered Argentine bonds, and since local banks have obligations to hold government debt, when prices of those bonds fall so do bank shares.
On Monday farm leaders were meeting to consider whether to lift their protest over oilseed export taxes that the government hiked in March.
Farmers have been holding back grains for export and their strike has caused a political crisis by challenging President Cristina Fernandez’s economic policy, and threatens to slow overall economic growth.
Government bonds on the local market rose 1 percent on average on Monday after falling sharply last week. The peso-denominated par bond rose 2.3 percent while the Boden 2014 in dollars rose 2.2 percent, traders said.
The peso currency gained 0.7 percent to 3.210/3.215 per U.S. dollar ARSB= in informal trade between foreign exchange houses as measured by Reuters. In formal interbank trade the peso slipped 0.08 percent to 3.1475/3.1500 per dollar ARS=RASL.
The central bank sold dollars last week to prevent a slide in the peso as Argentines jittery over the farm crisis sought save haven in greenbacks.
Traders said the peso had not been under pressure on Monday as investors expect a resolution to the farming crisis, but that the Central Bank intervened at the end of the session with some dollar sales to mark the closing price. (Reporting by Walter Bianchi, writing by Fiona Ortiz; Editing by Leslie Adler)