Der Crash der Woche....

``This exacerbates the risk aversion that we've been seeing in the recent weeks,'' said Lenora Suki, sovereign strategist at Santander Investment.

Since the Sept. 11 attacks on the U.S., investors have tended to flee riskier emerging market assets for safer havens.

``The risk is this will lead to broader pressure across emerging markets,'' Suki said. ``Argentina and Brazil have taken the brunt ... but that pressure may start extending into other credits.''

On the positive side, Venezuela, Colombia, Ecuador, Russia and other oil exporter nations may benefit if the war puts upward pressure on oil prices. ``It's difficult to imagine a conflict like this not giving oil prices a lift,'' Suki said.

ARGENTINA BUDGET ANGST

So far as emerging market experts are able to concentrate on the economic fundamentals of the countries they cover, Argentina is expected to remain the week's top story.

Doubts that the government can balance its budget -- a condition of International Monetary Fund (news - web sites) lending -- or continue to make debt payments have weighed on Latin American assets all year. Things took a turn for the worse last month when tax revenues fell 14 percent year-over year, raising pressure on the government to restructure its debt in order to reduce its prodigious interest payment bills.

Argentina sovereign bond spreads widened dramatically last week with the country's portion of the JP Morgan Emerging Markets Bond Index Plus ending at 1880 basis points, a level not seen since Mexico's Tequila Crisis roiled Latin American markets in 1995.

Wider spreads reflect the perception of increased risk as measured against safe-haven U.S. Treasury bonds.

``A significant downside is already priced in and the market is likely to remain cautious and volatile ahead of the Argentine election,'' said Lacey Gallagher, Credit Suisse First Boston director for Latin American economics.

Argentina's Oct. 14 mid-term legislative elections are widely seen as key to how much congressional support center-left President Fernando de la Rua's coalition government will enjoy until the end of his term in 2003. Economy Minister Domingo Cavallo has denied rumors that he will resign after the vote is held.

EYES ON TURKEY

Turkish Economy Minister Kemal Dervis said on Friday that he had requested extra funds from the international financial community, giving rise to some speculation that bilateral aid would be provided by some G7 countries.

So Turkish debt investors will watch this week for news coming out of discussions between Dervis and international financial institutions in Washington.

Turkey won a $15.7 billion IMF-backed rescue program earlier this year to help it recover from a financial crisis that forced it to float its lira currency in February.

U.S. Treasury Secretary Paul O'Neill said on Saturday's Group of Seven finance ministers had agreed institutions like the International Monetary Fund are the best vehicle for helping countries in trouble like Turkey.

``We did talk specifically about Turkey,'' O'Neill said at the closing news conference of the G7 finance ministers meeting.