Profit-taking sinks Chile stocks, peso nr 9-mo high

(Updates with closing prices)

By Alexia Vlahos

SANTIAGO, June 17 (Reuters) - Chile's leading share index closed sharply lower on Wednesday as investors continued to take profits after recent sharp gains, while the peso firmed to a near 9-month high, traders said.

The blue-chip IPSA index .IPSA closed 2.78 percent weaker at 3,106.01 points, its biggest one-day percentage fall since December, preliminary closing data showed, while the all-market IGPA index .IGPA fell 2.31 percent to 14,863.04 points.

"It was profit-taking more than anything else because the market had recovered very quickly (in recent months)," said Pamela Auszenker, head of research at the Bci brokerage.

The IPSA, which is now up 30.7 percent year-to-date, rose around 16 percent in May, when it posted its biggest gain in a single month since January 1994.

Last week the Chilean bourse hit its highest levels since December 2007.

Soquimich SQM_pb.SN, Chile's leading exporter of fertilizer and one of the world's biggest producers of iodine and lithium, fell 6.24 percent to 19,247 pesos, while shares in Steelmaker CAP CAP.SN fell 5.31 percent to 13,138 pesos.

Industrial conglomerate Copec COP.SN, the most heavily weighted company on the bourse, fell 3.16 percent to 6,482.70 pesos a share.

Cencosud CEN.SN, one of Latin America's largest retailers, fell 2.47 percent to 1,399.70 pesos, while retailer La Polar LAP.SN fell 1.96 percent to 2,191 pesos a share.

Regional energy group Enersis ENE.SN fell 1.92 percent to 189.50 pesos a share, while electricity generator Endesa Chile END.SN fell 1.32 percent to 850.23 pesos.

Chile's peso closed at a near 9-month high as investors held back from renewing dollar forward positions following the government's decision to repatriate and convert $4 billion in savings into pesos, dealers said.

The peso CLP=CL closed 1.61 percent firmer at 546.00/546.50 per dollar compared to Tuesday's close at 554.80/555.30.

The peso is now up 17.4 percent against the dollar year-to-date after slumping 22.3 percent in 2008.

The government announced on Monday it would cash in $4 billion in windfall copper savings to counter a ballooning fiscal deficit. The central bank will sell the dollars for pesos on behalf of the government starting in July.

"The government's announcement to extend the dollar sales has created a new scenario for the exchange rate," said one foreign exchange dealer. "For now, the peso should firm against the dollar." (With reporting by Froilan Romero and Manuel Farias; Editing by Diane Craft)