Chilean stock indexes gained on Friday, as investors snapped up lower-priced stocks following a four-session slump. The all-market IGPA stock index rose 0.45 percent to 13,898.81 points, while the trade-weighted blue chip IPSA index advanced 0.73 percent to 3,031.53 points.
Chilean stocks had declined for four consecutive days, causing the all-market index to slump 6 percent. Stocks fell in morning trade on Friday, but turned positive after big investors started buying in afternoon trade.
"Big players are jumping back into the market insurance companies, mutual funds, et cetera," said Antonio Fuenzalida, deputy investment manager with the Euroamerica brokerage. "They're showing that despite the subprime crisis, companies still have a value."
Leading Endesa Spain electric utilities Enersis, and Endesa Chile, rose 2.69 percent and 2.0 percent respectively. Both stocks converted an early-session slide into strong gains after UBS Pactual gave both stocks a "buy" recommendation following this week's sell-off.
Other rising issues included regional retailer Cencosud, with an advance of 1.89 percent to 1,885 pesos, and dominant air carrier LAN, up 1.07 percent to 6,800 pesos a share. Wood pulp producer and industrial conglomerate Copec ended the session 0.68 percent higher, while leading brewer CCU advanced 1.82 percent.
Fuenzalida said a continued recovery next week would depend on the performance of global markets. "We expect the local market to rise next week, but it will be indexed to the performance of foreign stock markets."
The Chilean peso strengthened 0.26 percent to 498.20/498.50 per dollar compared with Thursday's close at 499.50/499.80. Traders said effects of Thursday's rate hike were partially offset by high US inflation. Chile's central bank surprised analysts on Thursday by raising the target overnight lending rate to 6.00 percent from 5.75 percent in a bid to mitigate the effects of inflation.
"The rate increase yesterday surprised the market and boosted the peso," a trader said. "But the high US inflation makes it less likely the Fed will cut rates again soon, which caused the market to buy back dollars." Chilean inflation-adjusted five-year central bank bond yields rose to 2.95 percent compared to 2.91 percent at the close of the previous session.
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