* Peru rate normalization to begin in Q4 under Velarde -Citi * Chile"s peso moves away from Oct lows as copper prices rise * Latam stocks rise, Brazil index lifted by strong earnings By Susan Mathew Aug 10 (Reuters) - Peru"s sol lifted off all-time lows on Tuesday on hopes of continuity in central bank policies, while Chile"s peso firmed as the worker union at its Escondida mine extended talks by a day in a last-ditch effort to stave off a strike. Peru"s sol jumped as much as 2% to trade at 4.0384 after a source said central bank President Julio Velarde had agreed to stay on for an extra term, a move poised to calm markets rattled by the election of a new left-wing president. "(Velarde"s) presence ... should imply a continuation of current monetary policy and FX intervention frameworks, including the current inflation-targeting regime and consistent (currency) market intervention aiming to limit FX volatility," Citi Research strategists said. "With Velarde on board, we continue to expect policy rate normalization to begin in the fourth quarter." The sol is down nearly 11% so far this year, with almost all of that loss incurred after an early round of elections indicated a sharp swing to the left. Bonds were a touch weaker although well off lows hit earlier in the year. Chile"s peso rose 0.4%, away from an October low, as copper prices rose on supply concerns amid a looming strike at the world"s largest copper mine. Miner BHP, which operates the Escondida mine, and the powerful 2,300-member workers union, extended talks by a day. In 2017, a historic 44-day stoppage jolted global copper markets and slowed economic growth in Chile, the world"s top copper producer. As crude prices rose, exporter Colombia"s peso added 0.3%, lifting off 15-month lows. Brazil"s real was last up 0.1% in a volatile session as investors digested a welfare program and constitutional amendment regarding court-ordered payments. Even though the government sought to reassure that the new welfare program will not breach its spending cap, Citi strategists warned it could further harm the credibility of the spending cap in anchoring the perception of sustainability in fiscal policy. But gains in emerging market currencies were capped, with some even turning session gains to losses, as the dollar gained traction. Hawkish statements by some top U.S. Federal Reserve officials and upbeat U.S. jobs data last week bolstered bets that the Fed would start tapering stimulus soon. Mexico"s peso was down 0.2%, declining for a third straight session to hit a 14-day low. Most Latam stocks tracked broader EM and Wall Street higher. Colombian stocks were set for their biggest daily gains in three weeks, with oil major Ecopetrol rising 0.9%, tracking a rise in oil prices. Key Latin American stock indexes and currencies at 1432 GMT: Stock Latest Daily % change indexes MSCI Emerging Markets 1300.10 0.46 MSCI LatAm 2494.66 1.06 Brazil Bovespa 122999.90 -0.02 Mexico IPC 51195.18 0.58 Chile IPSA 4280.09 0.86 Argentina MerVal 66329.73 0.353 Colombia COLCAP 1235.02 0.45 Currencies Latest Daily % change Brazil real 5.2374 0.13 Mexico peso 20.1220 -0.28 Chile peso 782.9 0.18 Colombia peso 3981.43 0.30 Peru sol 4.0602 0.99 Argentina peso (interbank) 97.0200 -0.02 (Reporting by Susan Mathew in Bengaluru Editing by David Holmes) Our Standards: The Thomson Reuters Trust Principles.