October 31, 2008 / 5:58 PM / 12 years ago

Argentina markets trade mixed after S&P downgrade

BUENOS AIRES, Oct 31 (Reuters) - Argentine stocks rose on Friday but bonds edged lower, feeling pressure from a decision by Standard and Poor’s to cut the country’s sovereign credit rating for the second time in less than three months.

Argentine markets were already in turmoil as fears of default loomed when the center-left government’s announced plans last week to takeover the country’s private pension system, seen as a desperate move to secure funds.

On the foreign exchange market, the central bank made hefty dollar sales on Friday in order to prop up the local currency, which has been pressured in recent weeks due to safe-haven dollar-buying by savers and local companies.

“The central bank offered to sell about $400 million at 3.379 (pesos per dollar) when demand was pressuring the peso,” one currency trader said.

The peso was almost unchanged at 3.3850/3.3900 per dollar in formal trade between banks ARS=RASL.

It has fallen 7.8 percent this month in the interbank sector despite the repeated intervention of the central bank.

In informal trade between foreign exchange houses, as measured by Reuters, the peso was trading up 0.29 percent at 3.4600/3.4650 per dollar ARSB=.

In the local debt market, bonds were down by an average of 0.5 percent after rising by a similar margin a day earlier after a run of 11 sessions of losses.

Local Argentine bonds have fallen by an average 64 percent since the start of the month, and traders said Friday’s decision by the ratings agency further dampened investor sentiment.

Dollar-denominated 2038 Par paper traded down 3.3 percent in midday trade ARPARD=RASL to an ask price of 17.6, while the Bonar 2013 in dollars was down 2.7 percent ARBONAR13D=RASL to an ask price of 24.5.

The benchmark MerVal stocks index .MERV traded with gains in early afternoon trade after reopening following a brief suspension caused by a technical hitch. It gained on end-of-month bargain-hunting, traders said, but volume was low.

The index was trading up 3.86 percent at 1,013.98 points.

“It’s a typical end-of-the-month session, helped by the rise on Wall Street,” said Hernan Labrone, analyst with Fenix financial company.

Editing by Kenneth Barry

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