Chile peso, stocks gain with global markets

SANTIAGO, Nov 10 (Reuters) - Chile's peso traded stronger against the dollar on Monday, while stocks moved higher as global markets advanced following news of a $586 billion Chinese stimulus plan.

The peso CLP=CL CHILJ appreciated 0.71 percent to close at 633.30/633.80 per dollar, compared with Friday's close at 637.80/638.30, paring the peso's year-to-date loss against the greenback to about 21 percent.

"The stimulus plan unleashed a chain reaction in world markets, beginning in Asia and it also pushed up prices for raw materials, including copper," one trader said.

Prices for copper, Chile's leading export and a pillar of the local economy, surged over 10 percent on Monday before edging back to a gain of over 3 percent. Prices for the red metal have fallen by more than half since July, when it hit $4 per pound, supported largely by strong demand from China.

Gains in emerging currencies, stock markets and commodities -- seen as indicators of investor risk tolerance -- are usually accompanied by a decline in demand for dollars.

"Unfortunately, markets remain very volatile and overreact to any positive or negative news," the trader said.

Chile's blue-chip IPSA index .IPSA traded 1.73 percent higher at 2,619 points in afternoon trade, while the all-market IGPA index .IGPA advanced 1.34 percent to 12,304 points.

Blue-chip gains outnumbered losses by nearly 5 to 1 in afternoon trade, led by raw materials and bank stocks.

Steelmaker and iron ore producer CAP CAP.SN saw its shares surge 8.1 percent in afternoon trade, while fertilizer exporter Soquimich SQM_pb.SN, also the world's leading producer of lithium and iodine, advanced 3.1 percent.