Argentina's Fernandez calls for unity as political 'circus' spooks markets

FILE PHOTO: Argentina's President Alberto Fernandez speaks during a news conference with Spain's Prime Minister Pedro Sanchez (not pictured) at the Moncloa Palace in Madrid, Spain, May 11, 2021. Gabriel Bouys/Pool via REUTERS/File Photo

BUENOS AIRES (Reuters) - Argentina's center-left President Alberto Fernandez called for unity on Thursday after a rebellion from hard-left ministers threatened to break apart the ruling coalition following a bruising loss in a midterm primary election.

The government was shaken on Wednesday after interior minister Eduardo de Pedro offered his resignation along with several other leftist officials, signaling a rift within the party between more moderates and militant factions.

The government was badly beaten on Sunday in an open primary election, seen as a reliable indicator before a midterm congressional vote in November in which the ruling party could lose its grip on Congress.

"The governing coalition must listen to the message of the polls and act responsibly," Fernandez wrote on Twitter, saying he would guarantee unity of the party and that the government would continue to act in a way he "deemed appropriate."

"This is not the time to raise disputes that divert us from our path," Fernandez wrote.

The political uncertainty has spooked investors and weighed down local markets and the peso currency.

The official peso edged down, held in check by strict currency controls, but the currency dropped further in popular alternative markets. The S&P Merval stock index was down more than 1%, while sovereign bonds moved slightly lower.

In downtown Buenos Aires, protesters marched in the streets both for and against the government, generally remaining peaceful.

Fernandez has yet to officially accept or reject the resignations from the ministers allied with the more militant "Kirchnerist" wing of the Peronist coalition and powerful Vice President Cristina Fernandez de Kirchner.

"All this circus that they put together creates political, economic and social uncertainty," said Ramiro Marra, director of Bull Market Group in Buenos Aires. "It increases country risk, makes dollars more expensive and scares away investment."

Sunday's election has stoked tensions in the ruling party as it looks to recover ground, caught between plans to double down on populist measures or take a more moderate approach to attract middle-class voters who rallied behind the conservative opposition.

"We are facing a political crisis, which at the same time can lead to institutional chaos," said Raúl Aragón, a political analyst. "This was a Kirchnerist pressure that got out of hand."

(Reporting by Jorge Otaola and Walter Bianchi; Additional reporting by Hernán Nessi; Editing by Adam Jourdan and Will Dunham)

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