UPDATE: Argentina Stocks End Lower On Profit-Taking

(Updates to add that banks and exchanges will be closed Friday for the "Bank Worker Day" holiday.)

 
   By Shane Romig 
   Of DOW JONES NEWSWIRES 
 

BUENOS AIRES (Dow Jones)--Argentine stocks gave up early gains to close lower Thursday on a combination of profit taking and a drop in index heavyweight Tenaris (TS).

Argentina's Merval Index shed 0.87% to close at 2,222.81 points.

Banco Macro (BMA) started off strong after reporting a net profit of 190.9 million Argentine pesos ($50 million) for the third quarter, up 17% from a year ago. The company's earnings were boosted by the strong performance of government bonds.

Macro sold some of its sovereign bonds during the third quarter to be able to book some profits and may continue to do so in the fourth quarter, said Jorge Scarinci, Banco Macro's finance and investor relations manager, during a conference call to discuss the results.

The profit could have been even higher--by some ARS283 million--had it been allowed to value its bonds at market prices, instead of the lower level required by the central bank, Scarinci said. Macro has close to ARS600 million in sovereign bonds, he said.

However, Macro shares came under selling pressure during the afternoon as investors cashed in on the gains.

Macro's shares ended the day 2.07% lower at ARS11.80 ($3.09). The company's stocks rose as high as ARS12.60 in early trade.

Steel tube maker Tenaris, which carries the heaviest weighting on the Merval, slumped due to lower international oil prices. The company counts the petroleum sector among its leading buyers. Tenaris fell 1.85% to close at ARS74.10.

One of the bright spots was steelmaker Siderar (ERAR), which gained 2.26% to close at ARS20.35. Late Wednesday, the company said its third-quarter net profit rose 83% to ARS319.6 million.

Siderar said the higher profit was "mainly due to higher equity holding results and lower income tax."

The company also pointed to a turnaround in steel demand and production.

"During the third quarter 2009, world steel production continued to improve from the minimum levels in the first quarter of the year, as the destocking process in the steel industry's value chain subsided," the company said.

Bond price movements were minor as investors awaited the results of government efforts to deal with its remaining defaulted debt

Both the benchmark peso-denominated bond and dollar-denominated Boden 2012 closed unchanged at ARS106 and ARS318, respectively.

On Thursday, the Economy Ministry said it will try to settle its roughly $6.5 billion debt with members of the Paris Club by offering to issue a new bond.

Economy Minister Amado Boudou will pitch the idea to club members at a Group of 20 meeting in Scotland later this week.

News of the proposal comes a day after Argentina's House of Representatives passed a bill reopening a debt swap for the holders of about $20 billion in defaulted bonds.

The Senate has yet to debate the bill authorizing the offer, which requires congressional approval because a 2005 law expressly blocked a new swap.

The country is preparing a proposal to end the conflict with the holdouts who refused to accept terms of the 2005 swap. That swap involved a 65% discount, and any new offer will be on terms "more advantageous to Argentina," Boudou has said repeatedly.

The peso closed unchanged at 3.8175 to the dollar, with the central bank again stepping in to buy greenbacks and stem an appreciation of the local currency.

Markets will be closed Friday for "Bank Worker Day."

-By Shane Romig, Dow Jones Newswires; 54-11-4103-6738; shane.romig@dowjones.com

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(END) Dow Jones Newswires

November 05, 2009 16:35 ET (21:35 GMT)


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