(Updates with bourse close, fresh quote)

By Alexia Vlahos

SANTIAGO, May 26 (Reuters) - Chilean shares closed firmer on Tuesday at a fresh December 2007 high, boosted by sharp post-holiday gains on Wall Street, while the peso closed weaker, traders said.

The IPSA .IPSA blue-chip share index closed 0.85 percent firmer at 3,131.14 points, preliminary closing data showed, while the all-market IGPA index .IGPA closed 0.76 percent firmer at 14,734.78 points. The IPSA has gained 31.8 percent since the start of the year.

"We are following the rise on Wall Street," said Felipe Cruz, a trader at the CorpCapital brokerage.

The Dow Jones industrial average .DJI surged 2.37 percent after data showed the biggest monthly jump in U.S. consumer confidence in six years, boosting hopes of an economic rebound.

In local trading, steelmaker CAP CAP.SN fell 1.95 percent to 12,898 pesos a share, after surging 8 percent on Monday.

Cencosud CEN.SN, one of Latin America's largest retailers, traded 0.86 percent firmer at 1,457.10 pesos.

Shares in Cencosud rose after the firm announced it could restart construction on a $500 million mega-mall project it delayed in Santiago amid the global financial crisis.