BUENOS AIRES, Dec 19 (Reuters) - Argentine stocks fell on Friday as the slump in crude futures affected heavyweight oil sector issues, but bonds rose as the recent U.S. interest rate cut motivated interest in riskier markets with higher potential returns.
The benchmark MerVal index .MERV shed 1.83 percent to 1,095.93 points in a second session of profit taking after two weeks of gains. Volume was flimsy at $14 million. Of active issues 21 advanced, 28 declined and 11 were unchanged.
Among the loss leaders was Telecom Argentina (TEC2.BA), which slid 8.8 percent to 6.3 pesos per share after gaining for six consecutive sessions.
Market heavyweight Tenaris TENA.BA, a global leader in steel pipes for the oil industry, slipped 2.1 percent to 36.8 pesos per share as crude futures hit four-year lows.
"After such a big recovery period, it's evident that the market is going to settle, especially with ... the lack of liquidity that you feel at the end of the year," said Dionisio Corneille, director of his own brokerage.
On the local market, sovereign bonds gained for a third consecutive session, with the Boden 12 in dollars ARBODEN12D=RASL up 1.6 percent to an ask price of 25.55.
Traders said institutional investors are returning after stampeding out of Argentine debt in October when the government nationalized the private pension fund system heightening fears it would not be able to service its debt next year.
Low U.S. rates are making higher risk assets such as Argentina more attractive, they said.
In the foreign exchange market, the peso lost ground, down 0.29 percent to 3.4150/3.4175 per U.S. dollar in formal interbank trade ARS=RASL. In informal trade between foreign exchange houses, as measured by Reuters, the peso inched up 0.07 percent to 3.465/3.470 per dollar ARSB=. (Reporting by Jorge Otaola and Walter Bianchi, writing by Fiona Ortiz)