Chile peso, stocks slip anew as Wall St nose-dives

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By Froilan Romero and Manuel Farias

SANTIAGO, Oct 9 (Reuters) - Chilean stocks slipped to a new two-year low on Thursday, as Wall Street plunged on growing fears of a global recession, while the peso extended its slide against the dollar to a new four-year trough.

Chile's blue-chip IPSA .IPSA fell 1.61 percent to close at 2,202.46 while the all-market IGPA index .IGPA lost 1.12 percent to 10,840.91.

Chilean blue-chips have fallen 20 percent this month, but losses on Thursday were mild compared with Wall Street, where two major indexes plummeted over 7 percent in a late-day sell-off, as investors worried about global recession in spite of concerted efforts to free up credit markets.

The International Monetary Fund on Wednesday said in its forecast the world economy was set for a "major downturn."

"I think the word is 'recession': we are in a recession. If the market doesn't want to see it that way, that's another question," Cesar Perez Novoa, general manager of brokerage Celfin Capital.

"The measures that have been applied have been great, but you have to consider that the effects haven't been tangible."

After making strong gains in morning trade, Chilean stock indexes turned sour before the market close.

Endesa Spain (ELE.MC) regional generating affiliate Endesa Chile END.SN (EOC.N) ended 2.71 percent lower, while regional diversified retailer Cencosud CEN.SN fell 1.93 percent.

Blue-chip loss leaders included wood panel manufacturer Masisa MSS.SN, with a slide of 8.59 percent and dominant air carrier LAN LAN.SN (LFL.N), with a drop of 5.66 percent.

Gains by leading wine exporter Concha y Toro CHT.SN, up 5.25 percent, and by wood pulp exporter Copec COP.SN, with an advance of 0.79 percent, partially offset index losses.

The peso CHILJ CLP=CL weakened 0.13 percent to close at 611.30/611.80 per dollar compared with Wednesday's close at 610.50/611.00.

"The peso got off to a pretty auspicious start today because foreign markets were rebounding after the recent slide. But it lasted until Wall Street opened negative and dragged Europe (down) with it," one trader said.

"It's clear that markets are still fearful of a global economic recession, fueled by the credit crisis that began in the United States and is spreading worldwide."

In the prior five sessions the peso dropped more than 8 percent as regional currencies were battered by demand for greenbacks amid a widening global financial crisis.

The peso now has fallen over 18 percent against the dollar year to date, and nearly 30 percent since March when it brushed levels of 430 per dollar. (Writing by Lisa Yulkowski; Editing by James Dalgleish)