Talks in Washington include Argentina's standby financing deal as well as "the potential of other forms of financing" for Latin America's third largest economy, IMF spokesman Gerry Rice said, without offering specifics.

"Progress is being made in those discussions, which are now continuing at the technical level, and again, on how to further strengthen the Argentine authorities' program, which is backed by the IMF," Rice told a media briefing.

"We will be working to conclude as rapidly as possible," he added.

Argentina signed a $50 billion standby deal with the Fund in June. A new deal with the IMF is seen as key to shoring up investor confidence in Argentina's ability to pay its debts, after the peso sunk about 50 percent against the dollar this year amid a broader sell-off of emerging market assets.

Late on Wednesday, Economy Minister Nicolas Dujovne said he had "enormous confidence" that Argentina would be able to reach agreement with the IMF to end the turmoil. Argentina is seeking early disbursements from the standby pact after the peso got pounded 16 percent lower last week.

As the new talks continued in Washington for a third day on Thursday, the peso gained 2.86 percent to close at 37.45 per dollar, its second straight day of gains. Argentina's Merval stock index <.MERV> was up 3.78 percent.

Most economists say default is unlikely, in part because the government's fiscal program uses conservative estimates of its debt servicing needs.

'ENOUGH CUTS!'

The market is waiting to see the terms of the new IMF pact, said local consulting firm Portafolio Personal, noting a more optimistic mood despite moderate trading volumes.

But many Argentines did not share the brighter outlook.

Thousands marched against President Mauricio Macri and the IMF in Buenos Aires on Thursday, a reminder of the political hurdles Macri will face in implementing new belt-tightening measures aimed at securing IMF funds.

"Moving forward with the IMF deal will only speed up the negative effects these policies will have on the most vulnerable parts of society," said Milca Sosa, 28, the head of a housing cooperative in a Buenos Aires suburb. "We're the ones living with these adjustment policies."

Carrying signs that said "Macri=Hunger" and "Enough Cuts!" protesters - many of whom belonged to powerful union and leftist groups - demanded Macri abandon talks with the IMF.

The talks have revived painful memories of the 2001-2002 economic crisis that plunged millions into poverty, which many in Argentina blamed on austerity terms for an IMF bailout.

On Monday, Macri announced new austerity measures - including steep spending cuts and taxes on exports - to eliminate the country's primary fiscal deficit next year - a year early than previously planned. He is expected to send the 2019 budget to Congress for approval in coming weeks.

Argentina, which defaulted on its debt in 2002, has been convulsed by economic crises about once every decade for 70 years, making it vulnerable to market jitters.

Capital Economics said Argentina should be able to service its upcoming debts. But "failure to secure further IMF funding or fiscal slippage before large debt repayments due in November would make default a very real possibility," it added in a note.

Economy Minister Dujovne said Wednesday that he hopes a deal can be put to the IMF board for approval this month.

The IMF's Rice declined comment on the timing of a potential deal.

(Reporting By Daina Beth Solomon in Washington and Scott Squires and Jorge Otaola in Buenos Aires; Writing By Mitra Taj; Editing by Chizu Nomiyama and Alistair Bell)

By Daina Beth Solomon and Scott Squires