Chile stocks fall as investors bet on rate hike

By Froilan Romero and Manuel Farias

SANTIAGO, Sept 1 (Reuters) - Chile's stocks fell in high-volume trading on Monday as investors bet on a fresh rate increase when the central bank meets later this week, while the peso slipped against the dollar.

Chile's all-market IGPA stock index .IGPA closed 0.65 percent lower at 13,686.15 points in trading that was strong despite the fact that U.S. markets were closed on Monday for the Labor Day holiday, provisional data showed. The blue chip IPSA .IPSA index fell 0.77 percent to 2,872.83 points.

"The central bank will continue with its cycle of hikes and restrictive rhetoric, which helps the peso but puts restrictions on certain sectors of the stock market," the Celfin Capital brokerage said in a report.

With benchmark interest rates already at their highest level in around a decade, Central Bank President Jose de Gregorio said last week further interest-rate hikes were likely to try to curb inflation at its highest level in 14 years.

Last month, Chile's Central Bank raised its target overnight lending rate by 50 basis points to 7.75 percent, the third such increase in as many months.

Some market players are betting on another 50-basis-point increase later this week.

Trade volume was helped by Celfin's sale of a package of stocks worth about $88.6 million and comprising shares of Cencosud CEN.SN, Copec COP.SN, CMPC CAR.SN, Endesa END.S and Enersis ENE.SN.

Shares of the five companies, some of the heaviest-weighted on the Santiago stock exchange, fell subsequently.

Regional energy group Enersis ENE.SN fell 1.55 percent to 173.50 pesos a share. Its leading generation unit Endesa Chile END.SN fell 1.05 percent to 775.10 pesos.

The stock of Chile's top industrial conglomerate and leading wood pulp producer Copec COP.SN fell 0.64 percent to 6,237 pesos. Shares of CMPC CAR.SN, one of the nation's leading forestry and paper companies, ended off the day's low, dipping 0.08 percent to 15,800 pesos.

Shares of Cencosud CEN.SN, one of Latin America's largest retailers, lost 1.27 percent to 1,476 pesos.

The Chilean peso CHILJCLP=CL slipped 0.4 percent against the dollar to close at 514.50/514.80 per dollar, versus Friday's close at 512.30/512.80.

The peso has now depreciated 3.24 percent for the year to date, compared with appreciation of 6.44 percent during 2007. (Writing by Pav Jordan; Editing by Jan Paschal)