UPDATE 4-Argentina to hold last-gasp debt talks with mediator Tuesday
(New throughout, adds exchange bondholders' offer, new court ruling, Paris Club payment)
By Alejandro Lifschitz and Daniel Bases
BUENOS AIRES/NEW YORK, July 28 (Reuters) - Argentina will on Tuesday meet the U.S. mediator in its battle with 'holdout' debt investors suing the country for last-minute talks to avert a second default this century, but hopes for a deal are fading fast.
Mediator Daniel Pollack said on Monday the Argentine government advised him it was sending a delegation of technical, financial and legal representatives to meet him at 11 a.m. EDT (1500 GMT) on Tuesday in his office in New York.
However, Argentine government sources said Economy Minister Axel Kicillof, the country's chief dealmaker who has brokered deals with foreign creditors and investors this year, will be in Caracas, attending a meeting of the South American trade bloc Mercosur.
"I again urged direct, face-to-face conversations with the bondholders, but that will not happen tomorrow," Pollack said, referring to the holdout creditors.
Argentine dollar-denominated bonds closed down as much as 3.3 percent in over-the-counter trading on Monday, as investors worried about Wednesday's deadline for Latin America's No. 3 economy to either pay the New York hedge funds in full or cut a deal to stave off a default.
Argentina's isolation from global capital markets means an eventual default would be highly unlikely to send shockwaves through emerging markets worldwide. But it will hurt a domestic economy already in recession and battling soaring inflation.
Negotiations have made scant progress in the past three weeks. If the deadlock persists, U.S. District Judge Thomas Griesa will prevent Argentina from making a July 30 deadline for a coupon payment on exchanged bonds, triggering a new default. Continuación...