By Karin Strohecker
LONDON (Reuters) -Argentina's international bonds jumped and stocks climbed on Tuesday ahead of an expected meeting between U.S. President Donald Trump and Argentine leader Javier Milei, extending the previous session's sharp gains.
The country's dollar bonds, stock market and peso currency all strengthened on Monday after U.S. Treasury Secretary Scott Bessent said "all options" of support were on the table for Argentina, including swap lines and direct currency purchases from Washington.
Tuesday's moves lifted bonds up as much as 2.3 cents before they retraced some of their gains, still up more than 1 cent on the dollar, data from MarketAxess showed.
U.S.-listed shares of Argentine companies also rose in premarket trading with Banco BBVA Argentina jumping 6% and Grupo Financiero Galicia up 2% while energy firm YPF gained 2.5%. This follows gains of 15% on an index of Argentine stocks trading on U.S. exchanges on Monday.
WHAT WILL U.S. SUPPORT LOOK LIKE?
The country's embattled peso currency, which has not started trading on Tuesday, strengthened nearly 5% to the dollar - a sharp reversal after the Argentine central bank last week burned through more than $1 billion of reserves to defend it.
Lack of detail on what the Trump administration would provide to Argentina had investors speculating on the shape and size of the support.
"The U.S. support announcement is significant," said Simon Waever, a strategist at Morgan Stanley.
"A loan perhaps tied to future U.S. investments seems more realistic than the U.S. buying ARS (peso) or a swap facility."
Earlier this year, Argentina renewed a $5 billion swap line with China's central bank, which forms part of an overall $18 billion facility with the PBOC that has helped the South American nation to shore up its reserves, but has also drawn ire from Washington.
CONCERNS OVER MILEI'S ABILITY TO KEEP REFORMS ON TRACK
Financial assets of Argentina, a serial defaulter on its debt, have been on a rollercoaster in recent months and years.
Investors have broadly warmed to Argentina since Milei became president in December 2023 and launched an ambitious reform programme.
However, markets have fallen sharply in recent weeks, with international bonds still down near 10% for the year and the peso coming under pressure after corruption allegations inside Milei's inner circle and a larger-than-expected loss in a local election in Buenos Aires triggered concern over his ability to reshape the economy.
(Reporting by Karin Strohecker; additional reporting by Nikhil Sharma; editing by Marc Jones)
