Argentine president resigns

Hundreds of protesters have clashed with police

Argentine President Fernando de la Rua has resigned after two days of violent nationwide protests over economic hardship in which at least 20 people died.

Congress is due to meet at 1100 (1400 GMT) on Friday to accept the resignation.

President de la Rua blamed the riots on "enemies of the republic"

The opposition Peronist leader Ramon Puerta, who is the head of the Senate, is expected to be named as interim president.

Mr de la Rua left Government House in Buenos Aires by helicopter after a day watching running battles outside between protesters and police.

His departure drew cheers from protesters and some danced in the streets.

Earlier, police tried to quell the crowds by charging them on horseback and pummelling them with water cannon and volleys of tear gas, often firing directly at protesters.

More than 2,000 people were arrested nationwide. In Buenos Aires, one man was dragged by his hair, others carried kicking and shouting to police vans.

Rioters set fire to the finance ministry and two major banks, in some of the worst unrest to grip Argentina for a decade. In other large cities looters ransacked homes and supermarkets.

President's offer rejected

Public fury was sparked by government austerity measures aimed at reviving an economy verging on bankruptcy, with debts of $130bn and nearly 20% of the workforce unemployed.

I trust my decision will contribute to the peace and to the institutional continuity of the republic

President Fernando de la Rua

Mr de la Rua said he decided to step down midway into his four-year term because opposition parties had rebuffed his offer to form a coalition.

Mr de la Rua had called for the formation of a national unity government. But the Peronists rejected his plea.

The country's 72 senators and 257 deputies are to hold a joint session where a simple majority of one vote more than 50% of the total cast could elect either a new interim president to serve out Mr de la Rua's term or call elections.

All the members of Mr de la Rua's Cabinet have already handed in their resignations, although he only accepted that of the Economy Minister, Domingo Cavallo.

Protesters have seen their living standards deteriorate sharply

The BBC's Tom Gibb in Buenos Aires says urgent efforts are now under way to craft an alternative economic policy.

The main Peronist faction wants to end the system tying the Argentine peso to the US dollar. That would mean a devaluation and almost certainly a default on the $132bn debt.

Debt conversion

Our correspondent says the big problem is that many ordinary Argentines have mortgages and other debts in dollars, as do businesses and farms.

The Peronists have not yet explained how they would fund the costly conversion of all of the debts into pesos.

Protests had been escalating since the government halted pension payments and froze bank accounts in an attempt to deal with the massive debts.

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Rioting worsened after the president called a state of emergency - giving the police special powers - in a bid to stem widespread looting.

The credit ratings agency Standard & Poor's has warned that Argentina could default on its sovereign debt as early as next month.

A default would in effect cut off any lifeline from the International Monetary Fund and send Argentina spiralling even deeper into a chaotic economic crisis.

Similar unrest marked the last financial crisis in Argentina in 1989, forcing the then president, Raul Alfonsin, to leave office early.

Argentina has been in a recession for almost four years.

Earlier this month, the IMF refused Argentina a further $1.3bn in standby loans, unless it balanced its budget for the year 2002.

Mr Cavallo had put forward budget proposals slashing government spending by 20% - but only by cutting public sector wages and reducing pension provisions.