UPDATE 4-Peru's markets volatile on election, Moody's

* CDS costs rise as nationalist candidate Humala gains

* Moody's says may upgrade Peru's ratings after election

* Sol weakens 0.54 pct, Lima stock index rises 4.29 pct (Adds quote from Humala, closing stock index price)

LIMA, March 21 (Reuters) - Peru's currency weakened and the costs of insuring the country's bonds rose on Monday as left-wing nationalist presidential candidate Ollanta Humala surged in polls for the April 10 vote.

The sol trimmed losses slightly after Moody's revised its outlook on Peru's debt to positive from stable but still closed at its weakest level in a month on the local spot market. Moody's said an upgrade was possible in six to 12 months after a new government is in place. For more see [ID:nN21301283].

In what marked the first time during the campaign that political noise has affected asset prices, the sol PEN=PE closed 0.54 percent weaker at 2.784 per U.S. dollar and Peru's five-year credit default swaps PEGV5YUSAC= rose 6 basis points to 124.

Three traders said the market was rattled by two polls released over the weekend that prompted foreign investors to trim positions.

"The market is quite complicated today because of the polls, which have pushed foreign clients to buy dollars on the spot market and stop renewing futures contracts," said one trader who declined to be named because of Lima's small market.

Despite the selling of the sol, Peru's main stock index closed up 4.29 percent as shares in the local unit of global miner Gold Fields (LACi.LM: Quote) (LAC.LM: Quote) rose more than 30 percent after its parent launched an offer to buy back its shares.