By Guido Nejamkis

BUENOS AIRES (Reuters) - Typically mum business
leaders are speaking out against President Cristina Fernandez's
administration after her tussle with Argentina's top media
group ruffled markets and sharpened political divisions.

Tensions between Fernandez and industry have increased due
to a labor protest last week by a truckers' union close to her
government and an escalation of a long-running dispute with
media conglomerate Grupo Clarin.

Company executives, many of whom have publicly backed the
administration's interventionist policies for years, are
voicing discontent ahead of an October 2011 presidential vote
that is expected to be tightly fought.

"Argentina needs to return to a normal, serious form of
behavior, within the rule of law," Cristiano Rattazzi, the
president of the local unit of Fiat Auto, told
reporters last week, adding that business leaders are not "the
government's doormat."

Cabinet Chief Anibal Fernandez hit back, saying, "I'm not
Rattazzi's doormat," and pointing to estimates for record
output in the automobile sector.

Business leaders' complaints have grown louder despite a
robust economic recovery. Argentina's economy is seen growing
by about 8.5 percent this year, thanks partly to strong demand
from neighboring powerhouse Brazil and a bumper grains crop.

Fernandez has been at odds with the Clarin group for two
years. But she stepped up her drive against the conglomerate
last week by accusing its leading newspaper, Clarin, and
competitor La Nacion of plotting with the military junta to buy
leading newsprint supplier Papel Prensa in 1976.

Just a few days earlier, the government stripped the
operating license from Clarin Internet provider Fibertel.

A blockade by unionized truck drivers of the steelmaker
Ternium Siderar worsened the mood among big business.

"The Papel Prensa issue, coupled with Fibertel, has created
a feeling of insecurity in the business sector in the sense
that it seems the state could take action against anyone," said
Jorge Todesca, a former deputy economy minister who heads the
Finsoport consulting firm.

"This is of course very negative for investment," he said.

Some economic analysts say corporate profit margins are
being eroded by a heavy tax burden and increased dollar costs,
with annual inflation estimated at above 20 percent, which is
also hurting investment.

The Argentine Industrial Union business lobby, which has
been a key government ally in recent years, issued a statement
lamenting that the blockade affecting Siderar "has become
something habitual in our country."

BOND PRICES HIT

The latest political tensions have weighed on sovereign
debt prices. Last week, locally traded Argentine bonds fell an
average 1.6 percent.

The heavily traded Par bond in dollars shed
3.9 percent, while dollar-denominated Discount paper
tumbled 6.8 percent.

"The reaction to the political outlook has been excessive.
Argentina is marked by constant disputes between different
power brokers and a lack of clear rules," a report by the
Delphos consulting firm said.

Despite the sell-off of recent days, bond prices have risen
nearly 2 percent since Aug. 1 and some financial analysts say
that with U.S. interest rates still at rock-bottom, Argentine
bonds will probably resume their upward tick.

Politically, the government's fight with Clarin should not
have much impact as long as the economy keeps roaring ahead,
according to Daniel Kerner, an analyst at political risk
consulting firm Eurasia Group.

Fernandez's husband and predecessor, former President
Nestor Kirchner, is widely expected to run for president next
year as the couple seeks to take turns in power.

"There is not much that the business community can do to
stop the Kirchners," Kerner wrote. "As long as economic
conditions remain supportive they will be competitive in next
year's presidential elections."
(Additional reporting by Jorge Otaola and Juliana Castilla;
Writing by Helen Popper and Hilary Burke; Editing by Dan
Grebler)
(helen.popper@thomsonreuters.com; +54 11 4318 0655; Reuters
Messaging: helen.popper.reuters.com@reuters.net))