April 12 (Bloomberg) -- Argentina's Merval had the second- biggest decline of the world's primary stock indexes on concern the country may fail to renew a $13.3 billion loan accord with the International Monetary Fund, causing economic growth to slow.

The Merval index fell 42.31, or 3 percent, to 1366.11 as of 2:29 p.m. New York time, the second-biggest drop among 60 indexes tracked by Bloomberg, behind Pakistan's main index. Grupo Financiero Galicia SA, the country's biggest non-government bank, led the drop.

Argentina in February agreed with 76 percent of its bondholders to exchange $62.3 billion in defaulted debt leaving $20 billion worth of defaulted debt in the hand of creditors who rejected the offer. IMF spokesman Thomas Dawson on April 8 said the country should ``develop a realistic strategy'' to resolve the demands of creditors who didn't agree to the swap.

``The IMF has signaled its position, which is that in order to reach an accord Argentina will need to reach an agreement accord with the holdouts to get rid of that debt,'' said Mariano Tavelli, analyst at Tavelli & Cia in Buenos Aires.

Carrying out the exchange is a condition for the loan accord with the IMF, which was put on hold last year. Argentina risks running out of money by July if it fails to win a new loan program with the IMF, said economist Martin Apaz, at Deloitte & Touche LLP in Buenos Aires.

The IMF said this month that Argentina needs to reopen the exchange and negotiate a restructuring with creditors that didn't accept the country's offer. Economy Minister Roberto Lavagna rejected the call, saying the reopening ``isn't going to happen.''

Appeal

The swap, originally scheduled for April 1, is on hold until a U.S. appeals court decides whether creditors who spurned the offer can freeze $7 billion of defaulted debt held by the exchange agent in New York.

Finance ministers from the Group of Seven industrialized nations may call on Argentina to reach an accord with bondholders who rejected the offer, Dow Jones reported today, citing a G-7 official that the agency didn't name.

In other Latin American markets, Venezuela's Caracas Stock Exchange index fell 1.7 percent to 26,933.07 after a government bond sale reduced the amount of money in circulation, lowering demand for stocks.

The government sold $1.6 billion of 20-year dollar- denominated bonds to local investors last week. Demand for dollar- denominated assets has grown since the government restricted foreign currency trading in January 2003.

``The bond sale drained liquidity, which has had an affect on stocks,'' said Socrates Longa, who helps manage a fund of Venezuelan and U.S. stocks at Mercantil Servicios de Inversion in Caracas.

Worst Performer

Venezuela's index has fallen 10 percent this year, the worst performance among the world's primary stock indexes.

Elsewhere in the region, Mexico's Bolsa fell 83.79, or 0.7 percent, to 12,341.62. Brazil's Bovespa was little changed, gaining 50.31, or 0.2 percent, to 25,950.04. The main stock index in Chile rose, while Colombia's IGBC fell. Peru's main index was little changed. Morgan Stanley's index of Latin American stocks fell 0.5 percent to 1506.29.

The following stocks are making significant gains or losses in Latin American markets today. Symbols are in parentheses after the company name. In Brazil, the preferred share is usually the company's most-traded class of stock.

Argentina

Grupo Financiero Galicia SA (GGAL AR), the country's biggest non-government bank, fell for a fourth day, declining 9 centavos, or 4 percent, to 2.18 pesos. Galicia's shares have dropped 14 percent this year. Banco Macro Bansud SA and BBVA Banco Frances SA also declined today.

Solvay Indupa SAIC (INDU AR), Argentina's biggest exporter of chlorine and caustic soda, fell 10 centavos, or 2.8 percent, to 3.52 pesos and have dropped 3.3 percent this year. A failure to resume a loan accord with the IMF could hinder economic growth, Tavelli said.

Tenaris SA (TS AR), the world's biggest supplier of seamless steel pipes to the oil and gas industry, fell 85 centavos, or 4.7 percent, to 17.10 pesos. The company's shares have gained 16 percent this year as crude oil rose to record highs, on expectations that demand may be stronger than forecast this year. Tenaris sells its products to the oil industry.

Venezuela

CA Nacional Telefonos de Venezuela (TDV/D VC), the country's largest telephone company, fell 75 bolivars, or 1 percent, to 7325 bolivars. The company said last month it expected the government to allow a rate increase by the end of this month. Rates have been frozen since February 2003. Shares have fallen 11 percent since March 8.

Chile

Empresa Nacional de Electricidad SA (ENDESA CC), Chile's biggest generating company, rose 13 pesos, or 2.8 percent, to 472 pesos. The shares have gained 16 percent since April 6, when the government proposed a bill to increase wholesale energy prices, and are at their highest level since Bloomberg began to track the stock in 1994. Endesa-Chile, as the company is known, will increase its revenue with higher prices, said Mariela Iturriaga, head of research at brokerage BBVA Corredores de Bolsa SA in Santiago.

Enersis (ENERSIS CC), the South America's second-biggest energy company and the parent of Endesa-Chile, rose 2.3 pesos, or 2.1 percent, to 109.8 pesos.

Mexico

Wal-Mart de Mexico SA (WALMEXV MM), Latin America's largest retailer, fell for a second day, dropping 11 centavos, or 0.3 percent, to 37.87 pesos. Walmex's first-quarter net income rose 35 percent to 1.85 billion pesos ($166 million), the company said last week. March same-store sales rose 9.5 percent versus a decline of 2.7 percent a year earlier.

Embotelladoras Arca SA (ARCA* MM), Mexico's second-largest Coca-Cola bottler, fell 29 centavos, or 1.3 percent, to 22.02 pesos. Jose Yordan, an analyst with UBS Securities, today reiterated a ``neutral 2'' recommendation on the company. Shares have fallen 9.8 percent since Feb. 10.

Brazil

Cia. Energetica de Minas Gerais (CMIG4 BS), or Cemig, the country's largest combined power generator and distributor, rose 1.45 reais, or 2.1 percent, to 70.30 reais. The stock had gained 15 percent this month, the best performance among Bovespa's 53 members. Pedro Batista, an analyst with Banco Pactual SA, raised his recommendation for Cemig to ``top pick'' from ``neutral'' after the country's power regulator granted Cemig a rate increase that was higher than Batista had forecasted. ``The market has not yet priced in the full impact of the tariff increase, therefore we recommend investors buy Cemig shares,'' the analyst said in a report.

Usinas Siderurgicas de Minas Gerais (USIM5 BS), or Usiminas, Latin America's largest producer of flat steel, fell 98 centavos, or 1.9 percent, to 50.47 reais, declining for as third day. Usiminas shares are the second worst among Bovespa members this month, with 13 percent drop. Shares of Brazilian steelmakers have declined this month on concern that commodities prices will fall, said investors such as Augusto Lange, who manages $176.5 million of assets for a high-yield fund at Neo Gestao de Recursos in Sao Paulo.

To contact the reporters on this story: Telma Marotto in Sao Paulo at at tmarotto1@bloomberg.net

Last Updated: April 12, 2005 14:50 EDT