950826

Argentine stocks

close weaker

BUENOS AIRES: Losing their early momentum, Argentine stocks limped to a lower close, dogged by lingering fears of a cabinet shake-up, traders said on Friday.

"We have yet to see if the market can digest the political turmoil," said trader Emilio Alessandro.

Blue chips surrendered gains of two percent to end 0.4 percent lower at 445.68 on the MerVal index, shedding eight percent for the week.

Prices took a big hit Thursday on the dilemma of Economy Minister Domingo Cavallo, who after denouncing "mafias" in state agencies recently came under heavy government fire.

Although President Carlos Menem came out in support of Cavallo Thursday night when rumours of his resignation ran rife, traders saw the endorsement as lukewarm.

Most traders said that either way, the market hinged on Cavallo. "It's said and scary. But the truth is there's nobody out there to replace him," said another dealer.

The Bolsa's all-share index closed 0.2 percent lower, with losers overtaking winners 24 to 16 and 11 issues flat.

Turnover slowed to 23.7 million pesos from 28.2 million Thursday's and traders said many of Thursday's bargain-hunters had cashed in on their earnings today. Losses were halved Thursday on late rumours of a Menem-Cavallo rapprochement.

"The relatively high volumes since Thursday reflect the extremely short positions held, with strong buying and selling," said Alessandro.-Reuter