* Foreign investors see opportunity in Peru sell-off
* Humala may talk the talk, but can he walk the walk?
* "It's going to have to be a show-me story"
By Herbert Lash
NEW YORK, April 14 (Reuters) - Some on Wall Street don't buy the Sell Peru story. Its growth prospects are too enticing and the left-wing nationalist leading in the polls has pledged to soften his stance if elected to the presidential palace.
Major U.S. fund managers invested in Peru are carefully examining the election campaign and weighing the outlook for the Andean nation, which is growing at an almost double digit pace and reveling in a mining boom.
Ollanta Humala spooked investors when he surged to the front in the first round of Peru's presidential race last weekend. The country's stock market has plunged and the currency slumped on fears Humala, who was pardoned for a brief coup attempt in 2000, will boost mining taxes and take over private companies.
Masha Gordon, head of emerging market equity strategy at PIMCO, which manages $1.2 trillion in assets, said Humala might be compelled to tone down his left-wing rhetoric, aimed at the large slice of voters not yet sharing in Peru's economic boom.
Humala has been signaling as much, with a key aide saying on Wednesday that his goal for Peru is economic stability and that he will not go down the road of left-wing leaders in Venezuela and Bolivia if he wins the June 5 run-off. For details see: [ID:nN13295500].
Gordon liked the low ratio of credit to the economy's size in Peru, and calls the recent market sell-off enticing.
"When the market drops 14 percent, clearly that will garner our interest," Gordon said. "After this drop, you can see the markets are not trading at distressed levels, which is a good sign. Investors are nervous, not panicked," she said.
Lima's general stock index .IGRA has tumbled almost 15 percent since March 28, when Humala gained in opinion polls and failed to calm investors' nerves after delivering what was then considered the most moderate speech of his career.
Jacek Dzierwa, global strategist at U.S. Global Investors in San Antonio, said he hopes Humala will compare the strides Peru has made if he wins, keep the country's pro-market policies and not "throw everything into the waste basket."
The market's dip might be a buying opportunity, albeit a calculated risk, said Dzierwa, who manages emerging market and commodity-based equity assets.
"We will be watching because as I said, we are not pulling out, we don't want to panic," said Dzierwa, who like other investors was surprised by Humala's surge in the polls.
Investors were stumped by Sunday's voting when the two candidates who appealed most to the poor -- Humala and Keiko Fujimori, daughter of a jailed ex-president -- beat three other candidates who were seen as far more market friendly.
"It's hard to understand what the electorate is expecting out of this, why take the chance in a change of direction? It's puzzling to me," said money manager Will Landers at BlackRock Inc, where he oversees about $10.5 billion in Latin American assets.
"It's disappointing because this is an economy that's been one of the few in the region to grow at an Asian-type rate."
Even though chronic malnutrition remains high, according to the World Bank, poverty levels have fallen by 30 percent since 2005 as foreign investment poured in and Peru even eked out positive growth in 2009 during the global financial crisis.
Landers, who called Peru his favorite smaller-sized country in the region, had reduced his exposure before Sunday's election and said he now wished he had reduced it further.
"I don't think you need to be in any hurry to buy the dip here," Lander said.
Investors are trying to parse what Humala or Fujimori might do once in power and are looking for signs that would reassure them, such as the appointment of cabinet members or a central bank governor they would find credible.
Stacy Steimel, in charge of Latin American equities at PineBridge Investments, which oversees about $85 billion in assets, said she was underweight large cap Peruvian stocks but owned a few positions in small caps she will hold for years.
Although Humala is trying to project the pragmatic image of former President Luiz Inacio Lula da Silva of Brazil, Steimel said she was unsure and waiting for confidence-building signs.
"He's trying to calm every one down, but can he become a Lula? I don't know, we'll have to wait and see," Steimel said.
"It's going to have to be a show-me story." (Additional reporting by Jennifer Ablan; Editing by Andrew Hay)