Chilean stocks edged higher in mixed trade on Friday as investors bet weaker economic data could slow the central bank's rate-tightening cycle. The all-market IGPA index gained 0.39 percent to 14,602.10 points, while the trade-weighted blue chip IPSA index climbed 0.58 percent to 3,249.00 points.
This week Chilean economic data were weaker than expected, especially in industrial production, which is seen as the precursor to economic growth data due out next week. "The industrial production data opens the door for the central bank to take a breather before raising rates again, and the markets see that as positive," said Carles Gaju, an analyst with the Bice brokerage. Chilean stock gains were led by steelmaker and iron ore miner CAP, whose stock surged 4.59 percent to 14,400 pesos a share.
CAP has made sharp gains in recent sessions after the US Federal Reserve's aggressive rate cut boosted the outlook for raw materials producers. Soquimich, the world's leading lithium and iodine producer, rose 1.73 percent to 8,779 pesos a share.
Other blue chip advances included regional retailer Falabella, with a rise of 2.43 percent to 2,530 pesos a share and dominant air carrier LAN, up 3.04 percent. "Next week I think we'll continue to see volatility and some gains in stocks that are attractively valued," Gaju said.
The Chilean peso strengthened 0.18 percent to close at 510.80/511.10 per dollar, compared with Thursday's close at 511.70/512.00. It was the peso's strongest close since December 2005. Traders said market fundamentals favouring the peso's strength were offset by concerns about potential intervention to halt the decline of the greenback.
"Today, every time the dollar fell below 511 pesos we saw renewed institutional demands for dollars, which confirms fears about a possible intervention. On top of that there are the complaints of exporters whose profit margins are hurt by the weaker dollar," one trader said.
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