UPDATE 1-Argentina to reopen diesel, gasoline exports-source

(Updates with details, background)

BUENOS AIRES, Jan 11 (Reuters) - Argentina's government struck a deal with oil companies on Friday to reopen gasoline and diesel exports once domestic prices for the fuels are rolled back to Oct. 31 levels, a government source said.

State news agency Telam reported on Monday that Argentina had frozen exports of the fuels to boost dwindling supplies in the local market and stem rising costs.

Once prices are lowered to the agreed level, the government promised to "allow export permits," the source said.

The deal was signed by the local units of Spain's Repsol YPF (REP.MC), Brazil's Petrobras (PETR4.SA) and Exxon Mobil Corp (XOM.N) affiliate Esso, the source said on condition of anonymity.

The source said the government would be monitoring price levels and supplies at service stations over the weekend.

Former President Nestor Kirchner's government restricted exports of products such as beef and wheat to ensure domestic supplies and tame inflation.

President Cristina Fernandez de Kirchner succeeded her husband in power last month in a rare democratic handover between spouses. (Reporting by Damian Wroclavsky and Lucas Bergman; Writing by Hilary Burke; Editing by Christian Wiessner)