Argentina stocks jump 5.6 pct amid bargain hunting
Reuters, 07/13/2001 18:09
By Gilbert Le Gras
BUENOS AIRES, Argentina, July 13 (Reuters) - Argentina stocks rebounded 5.6 percent on Friday after spiraling interest rates and debt default fears pulverized the bourse before a political consensus to cut spending firmed at week's end, traders said.
The benchmark MerVal <.MERV> stock index ended up 5.59 percent at 329.08 points but was still down 11 percent on the week.
At its lowest point on Thursday, the MerVal index was down 27.8 percent in the last seven consecutive trading sessions.
The market rout this week was touched off by the sale of $827.7 million in 91-day Letes Treasury bills on Tuesday at 14.01 percent, the highest rate in at least five years.
Economy Minister Domingo Cavallo later said "we no longer have any credit," which set off fears of a debt default that broadsided emerging market bonds, stocks and currencies from Eastern Europe to Asia.
But growing political support on Friday for his "zero deficit" plan to cut spending to what Argentina earns in taxes restored a certain level of confidence in the market.
"The fact we're starting to find political consensus helped the market recover," said Leopoldo Olivari of Bacque brokers.
"What we need is lower interest rates. Shares rebounded but bonds didn't because rates are so high," Olivari added.
The stock market was characterized by heavy volume of $45.7 million with gainers more than doubling decliners 25 to 10 while 10 other issues remained unchanged.
The most heavily weighted share on the MerVal, energy group Perez Companc (BUE:PCH), rallied 13.5 percent to $1.26 but remained below its book value of $1.32, after slipping below that threshold last week amid the snowballing market turmoil.
"There's the beginning of a political agreement which helps," said Mario Zawadzki of Schweber brokerage. "We'll have to see how talks go with the (opposition) Peronist governors."
President Fernando de la Rua met Friday evening with Peronist governors who control 13 of Argentina's 23 provinces to try to gain their support for government spending cuts.
In New York, the Dow Jones Industrial Average (INDEX:$INDU) rose 0.57 percent and the technology-laden Nasdaq Composite Index (INDEX:$COMPX) gained 0.44 percent. buenosaires.newsroom@reuters.com)) |
