April 28, 2008 / 9:17 PM / 12 years ago

Argentine markets rebound after Friday's sell-off

BUENOS AIRES, April 28 (Reuters) - Argentine bonds recovered from some of the previous session’s heavy losses on Monday, climbing 1.3 percent on average, while the peso also firmed in calmer trade marked by less dollar-buying.

Argentine financial markets took a beating after former Economy Minister Martin Lousteau quit on Thursday, partly due to differences with other government figures over how to tackle inflation.

That came amid rising tension in negotiations between the government and farmers, causing jitters among investors who fear a resumption of last month’s three-week farm strike.

On the debt market <AR/BONOS>, gainers were led by the peso-denominated Par bond, which jumped 2.5 percent in over-the-counter trade.

In the prior session, bonds sank 3.2 percent and yield spreads over U.S. Treasuries crossed the psychological 600 basis point mark on JP Morgan’s EMBI+ bond index 11EMJ.

Monday’s recovery among locally traded bonds also helped lift the stock market as shares in Argentine banks — big holders of bonds — as well as energy stocks rebounded.

“With a bit of political certainty, the MerVal settled down, with banking stocks leading the recovery because they suffered the most,” said Leopoldo Olivari, a trader at the Bacque brokerage.

The benchmark MerVal index .MERV ended up 0.41 percent at 2,110.19 points. On the broad market, volume was $54.5 million, and of active shares 70 advanced, 34 declined and 20 were unchanged.

The local listing of Brazil’s state-run energy firm Petrobras APBR.BA rose 1.46 percent to 100.95 pesos per share, while BBVA Banco Frances FRA.BA saw its stock climb 4.24 percent to 6.88 pesos per share.

On Friday, the stock market fell 1.31 percent, clocking up a loss of 4.55 percent in four sessions.

In informal trade between foreign exchange houses, as measured by Reuters, the peso ARSB= appreciated by 0.62 percent to close at 3.2275/3.2325 per dollar.

In formal interbank trade ARS=RASL, where the central bank intervenes to stabilize the currency, the peso inched up 0.08 percent to 3.17/3.1725 per dollar.

Reporting by Walter Bianchi and Jorge Otaola; Writing by Helen Popper; Editing by Diane Craft

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