Chile stocks nudge higher, peso at 3-1/2-mo high - Wed Apr 12, 2006 5:10 PM ET - Reuters -

SANTIAGO, Chile, April 12 (Reuters) - Chilean blue-chips got a small bounce on Wednesday after five losing sessions, one day ahead of the central bank's monthly monetary policy meeting, while the peso continued a copper-fueled rise against the U.S. dollar to close at a 3-1/2-month high.

The IPSA blue-chip index <.IPSA> rose 0.50 percent to 2,137.88 points, while the all-market IGPA index <.IGPA> barely moved, up just 0.01 percent to 9,828.63, preliminary closing figures showed.

"This is only a bounce, I don't think we should get too enthused," said a trader. "Stocks like LAN got a bounce, but the market doesn't look good in the short term."

Dominant air carrier LAN Airlines (LAN.SN: Quote, Profile, Research) rose 2.14 percent to 3,820 pesos, after plummeting nearly 10 percent in the prior six sessions amid surging oil prices and political uncertainty surrounding presidential elections in Peru, where LAN has an affiliate.

Chile's leading wine exporter Concha y Toro (CHT.SN: Quote, Profile, Research) slid 1.49 percent to 729 pesos a share. The company is one of many exporters that have suffered the negative consequences of the strong peso currency.

Although some market players say the central bank could hold its benchmark interest rate flat on Thursday at 4.75 percent, to reign in the strength of the peso, the bank is widely expected to raise it a quarter-percentage point to 5.0 percent.

"I've heard some brokers say the central bank won't change the rates, but we'll have to see tomorrow. A lot will depend on what happens with the exchange rate," said Cesar Perez-Novoa, head of research at the Celfin investment bank.

The peso currency <CHILJ> <CLP=CL> strengthened by 0.29 percent to 513.50/514.00 per dollar compared to Tuesday's close at 515.00/515.50. It was the peso's strongest close since Jan. 2.

In the last 11 sessions the peso has gained almost 4 percent against the U.S. currency, as copper prices have hit record highs. Benchmark COMEX May copper futures <HGK6> hit a new life-of-contract peak of $2.80/lb. on Wednesday before settling back to $2.7655. (Additional reporting by Froilan Romero and Manuel Farias)