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CORRECTED-UPDATE 1-Argentina auctions dollar-linked bond, other debt for $3.18 bln to bolster peso

(Corrects dollar-linked and total debt issuance amounts in headline and body of story)

BUENOS AIRES, Oct 27 (Reuters) - Argentina auctioned a dollar-linked bond and other debt for a total of about $3.18 billion on Tuesday, the economy ministry said, as the government looks to ease pressure on the battered peso currency.

Argentina issued around $1.66 billion of the dollar-linked bond at 0.10% annual interest, the ministry said, part of a series of new measures by the government and central bank to stem the worsening economic turmoil in the country.

The trading volume of the five new instruments will serve as a measure of confidence in the policies of President Alberto Fernandez as his administration looks to stimulate peso savings and avoid further currency devaluations, traders said.

“The issuance of an 18-month dollar-linked bond will surely be a great success, which could appease devaluation expectations in the very short term,” said local firm Delphos Investment.

“However, the debt issuance itself could dilute quickly if not accompanied by a clear fiscal and monetary path for the next few months.”

Argentina issued around $1.8 billion in a dollar-linked bond on Oct. 6, a move the Economy Ministry said would help expand the government’s financing options, cover short-term repayment needs, soak up excess pesos and widen the local debt market.

The country is headed for an economic contraction of about 12% this year, which would be the third straight year of recession. The gap between the official rate and the black market peso was about 134.9% on Tuesday. (Reporting by Jorge Otaola and Walter Bianchi; Writing by Cassandra Garrison; Editing by Jan Harvey and Richard Chang)

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