Chile stocks advance on earnings, markets; peso falls

(Adds analyst quote, closing stock figures)

SANTIAGO, Oct 30 (Reuters) - Chilean stock indexes closed higher on Thursday, boosted by strong growth in quarterly earnings and by gains in global stock markets, while the peso weakened as forward contracts expired and copper prices fell.

Chile's blue-chip IPSA index .IPSA closed 2.17 percent higher at 2,489.59, bringing its gain for the week to 6.26 percent, while the all-market IGPA index .IGPA advanced 1.69 percent to 11,786.27.

U.S. and European markets made sharp gains in early trade on Thursday, but later trimmed advances in volatile trade.

"Markets seem to be moving more according to over-reaction than fundamentals. It's been a very volatile week," said Pamela Auszenker, an analyst with the BCI brokerage. "But the IPSA has been pretty stable in comparison to other markets."

Although Chile's September industrial output and unemployment rate were better than expected, Auszenker said it was the improvement in quarterly earnings performance that was bolstering the local bourse.

"Up until now our sampling of 23 IPSA stocks, which are pretty representative, has shown an average increase in EBITDA for the quarter of 46 percent, and profit is up about 50 percent," she said. "I definitely believe that our bourse is reacting at least in part to this."

Blue-chip gains on the Santiago exchange were led by banks, electric utilities and retailers.

Leading banks Santander Chile (STG.SN) and Banco de Chile CHI.SN surged 3.04 and 7.41 percent, respectively.

Chilean banks reported profits fell 18 percent in the first three quarters compared with the same period last year, but were otherwise stable amid the global financial turmoil.

Retailers Falabella (FAL.SN) and Ripley RIP.SN led their sector with advances of 3.99 and 5.25 percent. respectively.

Falabella has not yet reported third-quarter earnings but Ripley reported growth in net profit on Thursday of 61 percent for January-September compared with the same period last year.

Endesa Spain's (ELE.MC) leading regional electric utilities pulled indexes higher, with Enersis (ENE.SN) (ENI.N) up 1.06 percent and generator Endesa Chile (END.SN) (EOC.N) advancing 1.87 percent.

The two companies, with a combined weight of about 20 percent of the IPSA, reported on Wednesday that profits had more than doubled in the first nine months of the year on higher prices and new capacity.

Chile's peso closed near five-year lows on Thursday after reversing early gains as peso forward contracts expired and copper prices fell.

The peso CLP=CL CHILJ weakened 1.08 percent to close at 675.80/676.30 per dollar compared to Wednesday's close of 668.50/669.00. The peso is down over 26 percent against the dollar year to date.

"The peso got off to a strong start because of the rise in global markets in response to the U.S. rate cut, but later it fell because of the demand for dollars to renew forward contracts," the trader said.

"Some banks also closed positions to avoid risk over the long weekend."

Chilean financial markets will be closed on Friday for a religious holiday.

Commodity prices were hit on Thursday by recession fears, with the price of Chile's main export, copper, falling 10 percent in volatile trade. High copper prices in recent years have boosted the peso and driven Chile's trade surplus to record highs. (Reporting by Froilan Romero and Lisa Yulkowski; Editing by James Dalgleish)