Argentina stocks sink 4.9% on default worries

Argentine stocks lost 4.9 percent Thursday, as the government warned it could default on its debt at the end of the month after it lost a US court battle with bondholders.
The benchmark Merval index fell to 7,394.84, with most of the loss coming at the opening bell.
Late Wednesday, the economy ministry said it would be unable to make a court-ordered June 30 payment to creditors due to a federal judge's ruling that it pay at the same time "holdout" bondholders who had refused to take part in the 2005 and 2010 restructuring of the country's debt.
Argentina had fought the demands of the holdouts for full payment, but on Monday, the US Supreme Court gave a final victory to the holdouts' case.
That decision means that the country must pay out some $15 billion to the holdouts -- more than half the country's reserves -- as soon as it makes any regular payment to holders to the restructured bonds.
Buenos Aires, which calls the hedge funds that led the holdout court case "vultures," says it cannot afford to make those payments and will default.
The US ruling "prevents Argentina from making the June 30 payment to its creditors of the restructured debt unless they simultaneously pay the entire amount claimed by the vulture funds," the ministry said.
President Cristina Kirchner warned Monday that the country did not want to abide by the US ruling, likening it to "extortion."