Chile peso slides as banks renew forward contracts

By Aaron Nelsen

SANTIAGO, Sept 29 (Reuters) - Chile's peso fell to a two-week-low on Tuesday as banks stepped up purchases of U.S. dollars to roll over maturing forward contracts.

The currency CLP=CL also fell in line with U.S. stocks, traders said, weakening 0.7 percent to 547.70/548.20 per dollar from Monday's close of 543.70/544.20.

The peso has strengthened 17 percent against the dollar so far this year after slumping 22.3 percent in 2008.

"This high demand for the greenback may continue tomorrow because we are approaching the end of the month, when currency forward contracts are usually rolled over," according to a trader who declined to be cited by name.

Retail stocks buoyed Chile's blue-chip IPSA stock index, led by diversified retailer Cencosud CEN.SN, up 1 percent to 1,508 pesos. Rival Falabella FAL.SN, one of the region's top diversified retailers, rose 1.5 percent to 2,445 pesos.

The IPSA .IPSA was trading up 0.13 percent at 3,263.91, and the all-market IGPA .IGPA was 0.08 higher to 15,791.15.

"Today the market opened very strong, particularly everything related with builders and banks, following the upward trend in the U.S. market," said Allan Becker, a sales trader with CorpCapital. "At the beginning of the day the market was in a very positive mode, but it has leveled off since."

Construction companies continued to perform well as investors see opportunities in companies that have yet to reach their pre-crisis levels, Becker said.

Limiting gains were commodity and utility stocks, including Chilean steel and iron ore producer CAP CAP.SN, trading down 0.3 percent to 14,050 pesos. (Editing by Guillermo Parra-Bernal and Padraic Cassidy)