Chile stocks at 2-mo high post rate cut, peso up

(Updates with bourse close, fresh analyst quote)

By Alexia Vlahos

SANTIAGO, April 13 (Reuters) - Chilean shares closed sharply firmer on Monday at a two-month high following a central bank interest rate cut last week, while the peso ended slightly firmer, traders said.

The IPSA .IPSA leading share index closed 1.96 percent firmer at 2,636.51 points, preliminary closing data showed, while the all-market IGPA index .IGPA rose 1.69 percent to 12,504.02 points.

"More than anything, (the rise is due) to commodity shares ... and retail shares are also rising strongly," said Pamela Auszenker, head of research at the Bci brokerage. "It is also a reaction to the central bank's decision on Thursday ... to cut its benchmark rate again."

Chile's central bank cut its target overnight lending rate by 50 basis points to 1.75 percent, as expected, on Thursday, following a series of deep cuts in the first quarter in an effort to boost growth amid the global financial crisis.

The target overnight lending rate now equals its record low hit in 2004. The bank had slashed the rate by a record six percentage points during the first quarter.

Chile's financial markets were closed on Friday for Good Friday.

Soquimich SQM_pb.SN, Chile's leading exporter of fertilizer and the world's biggest producer of iodine and lithium, closed 3.5 percent higher at 17,993 pesos a share.