(Updates with closing prices, businesses call for weaker peso, regulatory action)
BUENOS AIRES, Oct 23 (Reuters) - Argentina’s peso and bonds slipped on Thursday but a power company’s share buyback offer helped stocks reverse a huge three-session slide on concerns over a surprise nationalization of the private pension system.
The MerVal .MERV index of leading stocks closed 2.43 percent higher at 963.7 points, after falling 23 percent over the three previous sessions.
“We had a MerVal recovery sustained by some opportunity buying and by some government intervention in buying of shares,” said Hernan Labrone, analyst with Fenix financial company.
Brokerages related with state banks were buying shares, traders said.
Volume leader was Pampa Energia PAM.BA, an owner of electrical power distribution and transmission firms which jumped more than 5 percent to 0.885 peso per share after the firm offered to buy back about 4.6 percent of its capital, or 70 million shares at 0.95 peso each.
After stocks trading closed, government regulator the National Securities Commission, said it would temporarily suspend the 10 percent limit on companies buying back their own shares, due to the extreme volatility on the financial markets.
Volume on the broad market was moderate at $30 million. Of active issues 21 rose, 28 fell and 15 were unchanged.
Investors have been extremely concerned about the government plan to take over $30 billion in private pension funds, because they are the biggest players on the local financial markets.
Also, critics decry the nationalization as a desperate government measure to find cash supplies to stave off a default on debt next year.
Sovereign bonds traded on the local over-the-counter market fell by 5 percent on average <AR/BONOS>, accumulating a 53 percent decline so far in the month of October. Argentine bond prices are so low they imply expectations of default.
The peso currency weakened on Thursday, but powerful business group the Argentine Industrial Union called on the government to allow the currency to soften further against the dollar to keep Argentine exports competitive with neighboring Brazil, where the currency has depreciated much more sharply.
The central bank here has intervened to keep the currency stable.
The peso closed down 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. (Reporting by Walter Bianchi, writing by Fiona Ortiz, Editing by Leslie Adler)