UPDATE 1-Colombia stocks hit by US trade decision, peso up

(Adds details on movement, remarks)

BOGOTA, April 10 (Reuters) - Colombia's stock market .IGBC closed at 9,305.76 or down 1.63 percent on Thursday in part due to concerns over a U.S. free trade deal, traders said.

But Colombia's peso COP=RR closed up 0.41 percent at 1,793 pesos against the U.S. dollar, hitting its strongest since July 1999, traders said.

Minutes before the close of trading, the U.S. House of Representatives voted to indefinitely delay action on the free trade accord for Colombia, which the government believes is vital for investor confidence.

Colombia's stock market .IGBC closed at 9,305.76 or down 1.63 percent also due to the U.S. decision, traders said.

"The reaction of the market was obvious given that in the end it is the stocks that are the most affected," said Accion y Valores investor analyst Alexander Cardenas.

Colombia has lobbied hard for a free trade deal, but U.S. Democrats have resisted saying they want the Washington ally President Alvaro Uribe to do more to tackle violence against labor union leaders. (Reporting by Javier Mozzo in Bogota; Editing by Theodore d'Afflisio)