* IPSA ends 2009 at new life high, up 51 pct
* IPSA's gain biggest in percentage terms in 16 years
* Peso ends year 26 percent firmer against the dollar
By Aaron Nelsen
SANTIAGO, Dec 30 (Reuters) - Chile's leading share index ended 2009 at a life high on Wednesday for a yearly gain near 51 percent as utility, retail and commodity stocks fueled the biggest annual rise in 16 years.
At the same time, Chile's peso currency ended with a 26 percent annual advance against the dollar, traders said.
The blue-chip IPSA index <.IPSA> advanced for a fifth consecutive session to close 0.51 percent higher at 3,581.42 points, an all-time closing high, after the government said industrial output rose a surprise 1.0 percent in November as the economy exits its first recession since the Asia crisis.
The bourse has set a string of new life highs in recent sessions.
The all-market <.IGPA> index rose 0.5 percent to close at 16,630.91 points.
The IPSA will likely continue gaining in 2010, said Rodrigo Andaur, head of research for FIT Corredores de Bolsa.
"The first few months of next year we should have a positive trend, depending on what happens in the United States," Andaur said.
But he added that "a good part of the economic recovery and the results expected for 2010 could already be incorporated in stock prices. Therefore my impression is that in 2010, profits on the market will be more normal."
Chile's bourse will close on Thursday and Friday for the New Year's holidays. Trade will resume on Monday Jan. 4.
Utilities led Wednesday's gains in high volume.
Shares in Chilean regional energy group Enersis
Shares in industrial conglomerate Copec
Soquimich
Chile's peso
That means the peso has appreciated 26 percent in 2009, boosted by wider dollar weakness, the closing out of carry trades and a sharp rise in prices for No. 1 export, copper, and offsetting a 22.3 percent depreciation in 2008.
The peso hit 17-month highs in November, boosted by wider dollar weakness. That prompted the central bank to warn of possible intervention, but peso strength has eased in recent weeks.
Analysts expect the peso to trade in a range of around 490 to 520 per dollar in the first part of next year. They say the exchange rate would depend on the trajectory of rising copper prices and how the dollar fares abroad, as well on what happens to interest rates, currently at life lows.
"We think it is unlikely the peso will go above 520 pesos per dollar in the first part of the year, and set a precedent when it firmed to 490 pesos, and beyond that level, the central bank would be raring to intervene," said Eduardo Orpis, an analyst with the Gemines Today consultancy. (Additional reporting by Froilan Romero and Maria Jose Latorre, Editing by Simon Gardner; Editing by Dan Grebler)