Chile stocks climb on commodities; peso fall
(Updates to market close)
SANTIAGO, Oct 5 (Reuters) - Chilean stocks advanced more than 1 percent on Monday, climbing to near two-year highs as rising global bourses fueled gains in retail and commodity shares, traders said.
Chile's benchmark IPSA .IPSA index rose 1.2 percent to 3,390.72, while the all-market IGPA .IGPA closed 1 percent higher at 15,957.60.
"The IPSA rose in line with the U.S. market," said Roberto Guzman, head of investment for FIT Research brokerage, "and stocks with the most weight on the market, such as Soquimich, Copec, Enersis, all posted solid gains."
Leading gains was Soquimich SQM_pb.SN, Chile's leading exporter of fertilizer and the world's biggest producer of iodine and lithium, rose near 2 percent to 21,978 pesos.
Chile-based regional energy group Enersis ENE.SN surged more than 2 percent to 201.150 pesos, and Chilean industrial conglomerate Copec COP.SN rose over 2 percent to 7147.60 pesos.
Earlier in the day, Chile's peso CLP=CL fell to seven-week lows, as foreign investors bought dollars in the local market to invest in countries with higher interest rates, especially Brazil, traders said.
For months, investors have bought greenbacks in Chile, taking advantage of low borrowing costs, but analysts see the trend slowing as they expect the central bank to increase its interest rate in 2010 amid an economic recovery.
Under the strategy known as carry-trade, investors borrow in countries with low interest rates and pour that money into markets offering higher returns.
The peso shed 0.5 percent to 556.50/557.0 per dollar from Friday's close of 553.70/554.20. The peso has gained 15.18 percent against the dollar this year after slumping 22.3 percent in 2008.
"Carry-trade is keeping the local currency at its current levels, largely ignoring favorable external market conditions that normally influence the peso," said a local trader, who asked not to be named because he was not allow to speak publicly. (Reporting by Aaron Nelsen; Editing by Diane Craft)
