UPDATE 5-Argentina's bonds slip, stocks plunge after presidential vote

(Updates listed domestic stock prices in paragraph 4)

By Jorgelina do Rosario

LONDON, Oct 23 (Reuters) - Argentina's international sovereign bonds fell and the country's stocks tumbled on Monday after Economy Minister Sergio Massa emerged as the surprise frontrunner in Sunday's general election as markets balked at the uncertain prospects ahead.

The country's 2035 overseas note suffered the sharpest decline, losing 2.3 cents and was being bid at 23.7 cents, while other notes were down between 1.65-2.16 cents on the dollar at 1450 GMT, according to MarketAxess data.

Argentine stocks fared little better, with U.S.-listed shares of oil company YPF plunging 9% in their worst day in over a year, while Cresud shares tumbled 6.2%. Shares of Banco BBVA Argentina, Grupo Financiero Galicia and Grupo Supervielle slipped between 3.5-5.6%.

Despite the latest drop, domestic stocks listed in Argentine pesos are still up more than 260% this year, supported by cheap valuations in anticipation of a change in political trajectory. Local investors have also been piling into equity markets to hedge against inflation which has soared into triple digits for the first time since 1991.

The ruling Peronist coalition smashed expectations to lead the country's general election on Sunday, setting the stage for a polarized run-off vote on Nov. 19 between Massa and far-right radical Javier Milei.

"Massa and Milei both herald greater uncertainty," said Graham Stock, London-based senior EM sovereign strategist at RBC BlueBay Asset Management.

"In Massa's case, the key question is which strand of the broad Peronist coalition would dominate in his government. In Milei's case, the key question is how much of his radical economic and social agenda would he be able to implement," Stock added.

The surprising strength of the Peronists, despite the country's worst economic crisis in two decades with a recession looming after a painful drought, sets up a second round between two polar opposite economic models for the embattled country.

While investors had expected Milei to reach a runoff, Massa's strong performance is negative for asset valuations as it means that market-friendly candidate Patricia Bullrich is out of the race, said Bruno Gennari, emerging markets strategist and Sales at KNG Securities LLP.

"We will follow closely what the different leaders of Together for Change have to say about the winning candidates, as some members of the opposition coalition might not be so happy with embracing Milei," Gennari said.

Massa had 36.6% of the vote, ahead of Milei on just over 30%, while conservative Bullrich was behind on 23.8%. "To win, Massa and Milei need to win over Bullrich voters," added Kimberley Sperrfechter, emerging markets economist at Capital Economics.

Argentina's peso opened steady at 350.10 per dollar, traders told Reuters.

(Reporting by Jorgelina do Rosario, additional reporting by Bansari Mayur Kamda in Bengaluru and Rodrigo Campos in New York, editing by Karin Strohecker, Sharon Singleton and Emelia Sithole-Matarise)