UPDATE 1-Chile LAN August passenger traffic up 13.7 pct

* Increase driven by higher regional traffic

* Cargo traffic up 16 pct in August (Adds cargo and international traffic details)

SANTIAGO, Sept 8 (Reuters) - Chile's LAN Airlines LAN.SN(LFL.N) said on Wednesday its passenger traffic rose 13.7 percent in August from a year earlier after gaining 14.5 percent in July.

LAN said the increase was due to a 15.1 percent jump in domestic passenger traffic in Argentina, Chile, Peru and Ecuador.

In August, the carrier inked an agreement with Brazil's TAM (TAMM4.SA) (TAM.N) to merge and create Latin America's top airline in a region that has seen air traffic rise even as the global economic economy lags.

LAN, already one of the region's most profitable airlines, said a greater presence in its U.S. operations helped boost international traffic by 13.1 percent.

LAN's cargo operations rose 16 percent in August on the back of recovering imports in Latin America, specially Brazil, as well as increased operations in Europe, the company said.

The airline's load factor grew 1.3 percent to 77.8 percent. (Reporting by Antonio de la Jara; Writing by Molly Rosbach; Editing by Andre Grenon and Richard Chang)