Chilean stocks rose for a third consecutive day in heavy trade on Friday, led by electric utility companies as investors returned to the market while the peso lost ground to the dollar.
The IPSA blue chip index rose 0.58 percent to 2,083.46 points while the broader IGPA index climbed 0.65 percent to 9,649.55, preliminary closing figures showed.
"Most of the operations were centered on the power companies, especially Enersis," said Lorena Pizarro, research manager with the Alfa brokerage. "Also recent talk of negative inflation in November would allow the central bank to relax its monetary policy, and that's helping the market too."
Financial markets are expecting negative inflation figures in November, with consumer prices dropping by perhaps 0.2 percent, due to lower fuel costs. In its weekly price announcement, the government petroleum company ENAP said on Friday it would cut gasoline prices on Monday.
The large electric companies continued to lead the market, with regional power giant Enersis rising 1.09 percent to 124 pesos a share and its generating unit Endesa up 0.47 percent to 530.50 pesos a share. Enersis alone accounted for 10 percent of the market's trade value.
Forestry products company COPEC led blue chip value leaders as its stock jumped 2.15 percent to 4,750 pesos a share. On the foreign exchange market, the Chilean peso followed the trend set by the Brazilian real, as it fell 0.51 percent to close at 527.00/527.50 per dollar compared to Thursday's close at 524.30/524.80.
"The fall of the real is too strong and it's one of the currencies that this market follows," said a trader. "Another reason is the economy minister's comments about not ruling out a central bank intervention."
"We don't believe that the peso has reached dangerous levels, but if there is evidence of speculation, we haven't ruled out an intervention by the central bank," Economy Minister Nicolas Eyzaguirre said on Thursday.
The peso has lost 10 percent against the dollar in the second half of 2005.