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Argentina Stocks, Bonds Rise On Positive Signs From EU, China

Source: WSJ
By: Shane Romig

BUENOS AIRES (Dow Jones)--Argentine stocks and bonds opened the week with moderate gains on broad market optimism fueled by positive news from Europe and China.

Banks led the gains after regulators in Basel unveiled new capital ratio proposals for banks, and China released strong economic data.

Argentina's Merval Index rose 0.86% to close at 2,457.92 points.

Banco Macro SA (BMA, BMA.BA) rose 3.21% to settle at ARS16.10 ($4.08), while Financial conglomerate Grupo Financiero Galicia (GGAL, GGAL.BA) added 1.45% to close at ARS3.49.

Sovereign debt also got a lift from the increased risk appetite and amid signs that Argentina is set to release gangbuster second-quarter gross domestic product growth data.

The government is expected to report double-digit GDP expansion during the second quarter due to high government and consumer spending, a sharp manufacturing rebound, bumper crops and strong growth in top trade partner Brazil.

The median estimate by ten analysts polled by Dow Jones Newswires was for 11% GDP growth on the year. The government is set to release the second quarter report on Friday at 16:00 (3 p.m. EDT).

The strong growth seen so far this year has led to a sharp increase in expectations for year-end expansion. Argentina's central bank expects GDP to expand between 8.9% and 9.5% this year. GDP grew just 0.9% last year due to the international financial crisis, according to the national statistics agency Indec.

During the first quarter, GDP grew 6.8% from a year earlier, while proxy GDP was up 12.4% on the year in May and up 11.1% in June.

The peso-denominated 2033 discount bond jumped 2.13% in price terms to ARS134.30, to yield 10.32%.

The dollar denominated Boden 2015, added 1.03% to settle at ARS351.50, trimming the yield to 10.98%.

The tightly-controlled peso closed unchanged to the dollar at ARS3.948. The Central Bank routinely intervenes in the local currency market to keep the peso trading within a tight band relative to the greenback.

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