Argentina slams U.S. Judge Griesa for 'imperialist' attitude

BUENOS AIRES (Reuters) - Argentina on Friday accused the U.S. judge who called the country's new debt restructuring plan illegal of making "imperialist" comments against the South American nation.

Latin America's No. 3 economy tipped into its second default in 12 years in July after U.S. District Judge Thomas Griesa blocked payments to holders of debt issued under U.S. law that was restructured following its record default in 2002.

Griesa ruled that measures announced by Argentina's president this week to make debt payments locally and push bondholders to bring their debt under Argentine law violated past court rulings. But he stopped short of holding the country in contempt.

Argentine Cabinet Chief Jorge Capitanich said U.S. District Judge Thomas Griesa's choice of words were "unfortunate, incorrect and even, I would say, imperialist expressions".

The government has pulled no punches in its stinging criticism of Griesa. It has accused the judge of abusing Argentina's national sovereignty and of siding with the U.S. investment funds who rejected large writedowns in the wake of 2002 and are suing the country for full payment on their bonds.

In a strongly worded statement issued late on Thursday, Argentina's economy ministry said Griesa's remarks showed a "complete ignorance of the functioning of democratic institutions."

Lawyers for Aurelius Capital Management, one of the so-called holdout investors suing Argentina, said there could be no hope of deal until was made clear to the Buenos Aires government that its efforts to skirt the court's rulings would be punished.

A resolution to long-running saga now looks unlikely before a change of government after next year's October election, analysts say. President Cristina Fernandez cannot run for another term.

Argentine assets were mixed on Friday. The bid price on dollar-denominated Discount bonds due 2033 slumped 2.5 percent to bid 78.171 cents on the dollar, while the Par bond due maturing 2038 was down 0.2 percent at 48.592.

The country's peso currency shed 5.2 percent in the two sessions after tough-talking Fernandez unveiled the draft bill late on Tuesday, its fastest fall since January, plumbing a new record low of 14 per dollar on the black market .

"Capital flight appears to be picking up," wrote David Rees, emerging markets economist at Capital Economics in a briefing note to clients. "If capital continues to pour out of the economy, the authorities will probably have to devalue."

The widening gulf between the central bank-controlled official rate and the black market rate since the default have fueled expectations of a hefty intervention similar to the shock 20 percent devaluation implemented in January.

On Thursday, the government ruled out such a move.

(Reporting by Jorge Otaola and Richard Lough Editing by W Simon)