Chile stocks fall, peso hits new 10-year high

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SANTIAGO, March 7 (Reuters) - Chilean stocks edged lower in afternoon trade on Friday, while the peso closed at its strongest in over 10 years, after weak U.S. jobs data confirmed the outlook for aggressive Federal Reserve rate cuts.

Chile's peso CHILJ <CLP=CL> appreciated 0.43 percent to end the session at 442.20/442.50 per dollar, compared with the prior session's close at 444.10/444.40.

The peso has gained for nine consecutive sessions, appreciating 12 percent against the dollar year to date.

"The market is expecting a significant U.S. rate cut - some are even talking about 75 basis points - and that view gained currency today because the sharp drop in non-farm jobs increased recession fears," one trader said.

The U.S. government reported a second straight monthly decline in non-farm payrolls in February. It was the biggest monthly drop in five years.

Chile's central bank has gradually increased its benchmark rate to 6.25 percent to control inflation, while the U.S. Federal Reserve has cut its rate to 3.0 percent to shore up flagging growth, a difference that makes the peso more attractive to investors.

The peso has also been buoyed by strong trade surpluses on the back of high prices for copper, the nation's leading export.

After news of the weak U.S. jobs data Chile's bourse slipped with global markets, with the all-market IGPA index .IGPA trading 0.47 percent lower at 12,833 points in afternoon trade, while the blue-chip IPSA index .IPSA fell 0.58 percent to 2,739 points.