January 30, 2008 / 9:26 PM / 12 years ago

Argentina stocks rise on U.S. rate cut, peso dips

BUENOS AIRES, Jan 30 (Reuters) - Argentine stocks rallied late in the session to close up 1.61 percent on Wednesday after the U.S. Federal Reserve cut its key interest rate by half a percentage point.

The MerVal index .MERV of 42 leading stocks ended at 2,036.18 points after falling by as much as 0.57 percent before the rate cut announcement, which seeks to fend off recession in the world’s biggest economy.

“(The Fed) did what was expected ... to lift the mood of the market,” said Augusto Farina, a trader at the Amirante Galitis brokerage in Buenos Aires.

The MerVal’s rebound mirrored those of other global stock markets following the aggressive half-point rate cut, which comes just eight days after it slashed rates by three-quarters of a point at an emergency meeting to counter market turmoil.

Earlier in the day, markets were pressured by the release of a report showing the U.S. economy grew less than expected in the fourth quarter, offsetting a previous report showing solid private job creation.

Among the MerVal’s strongest stocks was energy group Pampa Holding PAM.BA, ending up 4.79 percent at 2.19 pesos per share and energy distributor Endesa Costanera CEC.BA, which rose 4.55 percent to 3.68 pesos per share.

Volume on the broad market was a light $28.6 million with 42 issues advancing, 28 retreating and 15 unchanged.

On the debt market, Argentine bonds <AR/BONOS> fell by 0.1 percent on average in cautious trade tied to expectations over the Fed’s announcement, which came after the close.

The session’s losers were headed by dollar-denominated Boden 12 bonds, which fell 2.6 percent, while dollar-denominated Par paper rose 0.9 percent.

In formal interbank trade, where the central bank intervenes, the Argentine peso ARS=RASL closed 0.16 percent lower at 3.1550/3.1575 per dollar due to strong demand for dollars from private banks.

Informal trade between foreign exchange houses, as measured by Reuters, the peso firmed 0.24 percent to 3.1700/3.1725 pesos ARSB=. (Reporting by Jorge Otaola; Writing by Gaspard Sebag; Editing by James Dalgleish)

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