July 23, 2008 / 9:07 PM / 12 years ago

Argentine stocks slip after cabinet chief quits

BUENOS AIRES, July 23 (Reuters) - Argentine stocks fell on Wednesday in thin trade after a key aide to President Cristina Fernandez resigned, while bonds and the peso firmed.

The MerVal benchmark stock index .MERV rose 0.35 percent in early trade but fell after Cabinet Chief Alberto Fernandez quit, closing down 0.81 percent at 1,940.74.

“The exit of Alberto Fernandez opens a new panorama, and that led to a sharp reduction in trade volume due to investor caution,” said Mariano Tavelli from brokerage Tavelli and Co.

“The MerVal fell again due to the correction in energy stocks. From now on, the market will be looking for signs of what direction the government’s moving in,” he added.

The president replaced Alberto Fernandez after suffering a crushing defeat last week over farm policy.

Trade on the MerVal was a meager $21 million. Of active shares, 35 advanced, 29 retreated and 16 were unchanged.

Losses were led by energy-related stocks for a second straight session due to falling global oil prices. Index heavyweight Tenaris TENA.BA, which makes steel pipes for the energy industry, slipped 2.62 percent to 93 pesos per share.


Argentine bonds <AR/BONOS> rebounded in late trade to finish with light gains on the local market.

Locally traded debt closed up by an average of 0.5 percent in over-the-counter trade, after initially falling when the government announced the cabinet chief’s resignation.

The biggest gainers included the dollar-denominated Discount bond, maturing in 2033, which rose 2.2 percent and the peso-denominated Boden 2014, which climbed 1.0 percent.

On the foreign exchange market, the peso firmed despite the cabinet shake-up and the central bank did not have to intervene heavily to maintain the currency’s value, traders said.

In formal interbank trade, where the bank regularly intervenes, the peso ARS=RASL firmed by 0.25 percent to end at 3.0150/3.0175 per dollar.

In informal trade between foreign-exchange houses, as measured by Reuters, the peso ARSB= gained 0.24 percent to 3.0600/3.0625 per dollar. (Reporting by Jorge Otaola and Walter Bianchi; Writing by Helen Popper; Editing by James Dalgleish)

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