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To: Square_Dealings who wrote (80077)	12/20/2001 7:19:04 AM
From: long-gone	Respond to of 116759

Thursday December 20, 7:06 am Eastern Time GLOBAL MARKETS: Cautious on Argentine Woe By Dale Faulken LONDON (Reuters) - Stocks and currencies traded nervously on Thursday as an escalating financial crisis in Argentina raised fears that problems in Latin America's third biggest economy could spread to other emerging markets and possibly hamper a global economic revival. ADVERTISEMENT Argentine Economy Minister Domingo Cavallo resigned along with the entire cabinet on Thursday amid riots in which at least four people died as protests against austerity measure forced the government to impose a state of emergency. Stocks of Spanish companies with large investments in Argentina took an early hammering but regained most of their earlier losses by midday. The South African rand crumpled to the latest in a series of record lows, breaching 13 to the dollar. South Africa's open economy and relatively liquid markets have been hit hard by contagion effects from Argentina this year. Meanwhile, more economic gloom out of Japan drove the yen to deeper three-year lows against the dollar. ``Argentina is a bit of a topic in the market. So far there's little spillover and the view is that it's an Argentine problem rather than becoming a Brazilian or Mexican problem as well,'' said Sonja Hellemann, foreign exchange strategist at Dresdner Kleinwort Wasserstein in Frankfurt. But dealers said the market would keep a close eye on developments in Argentina. Major corporations, including large banks, have investments in emerging markets around the globe and the uncertainty created by the Argentine crisis is expected to keep investors away from some of these riskier countries. By 1145 GMT the FTSE Eurotop 300 index of pan-European blue chips edged up 0.25 percent while the narrower DJ Euro Stoxx 50 index rose 0.3 percent. Spain's biggest bank Santander Central Hispano was down 0.15 percent after falling around three percent earlier while Banco Bilbao Vizcaya Argentaria, Iberia's second biggest bank, eased 0.25 percent after dropping 2.6 percent in the first hour of trade. ``At this juncture, the drop we're seeing in Santander's share price is enough of an adjustment in value to accommodate this news, which must have been at least half priced in,'' said Magnus Mathewson, European banking analyst at Credit Lyonnais. ``Most people close to the sector have taken the view for at least six months that Argentina was going to go belly up.'' YEN WOES CONTINUE The yen hit a three-year low for the fourth time in five sessions, dropping to around 128.80 versus the dollar after news that the Bank of Japan had downgraded its view of the Japanese economy for the seventh month in a row, citing declining incomes, consumer confidence, output and exports. Dealers cited some profit-taking on yen positions ahead of next week's Christmas holiday period with investors unwilling to take any chances of a change in sentiment by Japanese officials who have so far seemed happy to let the yen slide. The yen was marginally firmer on the day against the euro after pulling back off a two-year low set earlier this week. The euro itself displayed a slightly softer tone against the dollar at $0.8980 and the Swiss franc, traditionally a safe haven at times of uncertainty, was almost a quarter of a percent up against the dollar at 1.6337 BONDS STEADY AFTER EARLY GYRATION Bund futures gave up earlier gains seen on the back of jitters about Argentina as investors squared positions due to year-end book closing and a reluctance to take new positions. Euro debt yields edged off lows but rises were seen limited as the market remained worried about a fallout from Argentina. ``People are just coming out of a long-end, but the short-end is not doing much. Argentina is still a worry but it's the year end and people are closing books,'' said a trader at a German bank. At 6:45 a.m. EST, the yield on the interest-rate sensitive two-year Schatz was up marginally 0.5 basis points at 3.526 percent but off an earlier one-week low. The March Bund future was down 0.09 at 108.40. Oil prices inched ahead as non-OPEC Oman announced further production cuts to help the oil cartel bolster prices. Benchmark February Brent was up 11 cents at $19.58 a barrel after opening seven cents lower. Independent Gulf producer Oman said it would increase its oil production cut to 40,000 barrels per day from January to June 2002. Oman had already cut output by 25,000 bpd from December 1. (Additional reporting from Gideon Long, Christina Fincher and Sabrina Ghani in London) biz.yahoo.com