October 23, 2008 / 6:41 PM / 12 years ago

Argentine peso falls, stocks pare gains

(Updates with peso close, updates prices)

BUENOS AIRES, Oct 23 (Reuters) - Argentina’s peso and bonds slipped on Thursday but a power company’s shares buyback offer helped stocks reverse a huge three-session slide on concerns over a surprise nationalization of the private pension system.

The peso currency fell 0.93 percent to 3.2525/3.2550 per dollar ARS=RASL in formal interbank trade, and ended down 1.67 percent to 3.3500/3.3550 per dollar ARSB= in informal trade between foreign exchange houses as measured by Reuters.

“It’s hard to find anyone selling (dollars) in any amount. The market is having trouble assimilating the state of nerves,” said a foreign exchange trader, who asked not to be named.

Traders said dollars were still seen as the safest option for local investors, and also foreigners were sharply reducing investments in Latin American assets, forcing central banks in Mexico and Brazil to step in to support their currencies.

Sovereign bonds traded on the local market fell more than 5 percent on average in afternoon trade <AR/BONOS>.

The MerVal .MERV index of leading stocks gained 0.29 percent, barely holding onto gains after jumping more than 4 percent in early trade. The index lost 23 percent over the past three sessions, unnerved by a surprise government plan to nationalize private pensions.

Volume leader was Pampa Energia PAM.BA, which jumped more than 5 percent to 0.885 pesos per share after the firm offered to buy back about 4.6 percent of the firm’s capital, or 70 million shares at 0.95 pesos each.

Stock in the company, which owns electrical power distribution and transmission firms, closed on Wednesday at 0.84 pesos each.

Argentina’s scheme to nationalize private pensions has caused chaos in local markets as investors fear liquidity will dry up because the market’s biggest institutional investors could disappear.

Also, investors read the move as a desperate plan by the government to stave off default, although it does resolve short-term debt payment obligations. (Reporting by Walter Bianchi, writing by Fiona Ortiz, Editing by Andrea Ricci)

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