Chile stocks extend gains, peso hits 2-week high

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SANTIAGO, July 8 (Reuters) - Chile stocks rallied in late trade on Tuesday, shadowing Wall Street gains as oil futures backed off record highs, while the peso closed at a two-week high against the dollar.

The all-market IGPA .IGPA closed 0.67 percent higher at 13,717.53 points, while the blue-chip IPSA index .IPSA advanced 0.86 percent to 2,820.51 points.

"Stocks just recently began to rise. I think investors are taking positions ahead of earnings reports. There are a lot of issues that have been penalized in recent weeks," said Cristian Contreras, an analyst with the Banchile brokerage. "We're also pretty much in line with U.S. markets."

The transport sector, favored by lower oil prices led percentage gains, as dominant airline LAN LAN.SN surged 4.36 percent and shipper Vapores VAP.SN advanced 4.35 percent.

Shares on the Santiago exchange were also led higher by wood pulp producers, with Copec COP.SN jumping 2.15 percent in closing trade and CMPC CAR.SN extending its gain to 3.51 percent.

Copec stock, the IPSA's most heavily weighted issue has lost about 24 percent year-to-date, while CMPC has fallen some 12 percent in the same period.

Retailers Falabella FAL.SN and Ripley RIP.SN partially offset blue-chip gains with declines of 1.92 and 2.41 percent, respectively.

The peso <CLP=CL> strengthened 0.69 percent to close at 504.30/504.80 per dollar compared with 507.80/508.30 on Monday.