* CEO says capital strength makes acquisitions possible
* CFO upbeat on Mexico prospects despite Trump win
* Q4 EPS C$1.58 vs C$1.51 market view
* Bank benefits from strong international, domestic growth (Adds CFO comments on Mexico, Trump, acquisitions)
By Matt Scuffham
TORONTO, Nov 29 (Reuters) - Bank of Nova Scotia, Canada's third-biggest lender, said it could take advantage of its financial strength to make acquisitions in the Pacific Alliance trade bloc after reporting better-than-expected profit.
Scotiabank said on Tuesday its earnings per share increased to C$1.58 from C$1.46 in the same period the previous year. Analysts had on average forecast earnings of C$1.51, according to Thomson Reuters I/B/E/S.
The company's shares rose as much as 2 percent to $73.98, a more than two-year peak, before trimming gains to trade 1.9 percent higher at $73.92.
The bank said its core tier 1 ratio, a key measure of its financial strength, was 11 percent, well above the minimum requirement set by regulators, which Chief Executive Brian Porter said gave it the flexibility to make acquisitions.
"Our strong capital position provides us the opportunity to invest in and grow our businesses both organically or strategically through acquisitions," he told analysts on a conference call.
Asked where potential acquisitions might be made, Chief Financial Officer Sean McGuckin told reporters the bank's international focus remained on the Pacific Alliance, a Latin American trade bloc comprising Mexico, Peru, Chile and Columbia.
McGuckin said the bank remained confident about its prospects in Mexico despite a plunge in the Mexican peso after Donald Trump's U.S. election victory this month raised fears about the country's economy.
"The trade between Canada, the U.S. and Mexico is so inter-linked. It's hard to see how that is going to change," he said. "It's hard to speculate but I think the market's discounting it more than we think it will play out."
Scotiabank already has the biggest foreign presence of any Canadian bank. It said this year marked the first time its international business had exceeded C$2 billion ($1.5 billion) which Porter said was driven by the Pacific Alliance region which recorded double-digit growth.
Net income from the bank's Canadian business grew by 14 percent to C$954 million in the fourth quarter ended Oct. 31, benefiting from the contribution from a credit card business Scotiabank purchased from JPMorgan Chase Bank.
McGuckin on the analyst call played down concerns about Canada's housing markets, saying the bank's residential mortgage book was "high quality" and "low risk."
On Monday, Canada's banking regulator urged the country's mortgage industry to support tougher lending rules, warning lenders could face big losses if overheating housing markets turn.
$1 = 1.3441 Canadian dollars Reporting by Matt Scuffham; Editing by W Simon and Meredith Mazzilli