Chile stocks end nearly flat: peso firms

SANTIAGO, May 9 (Reuters) - Chilean stock indexes erased early losses to end nearly flat on Friday, as late session gains led by iron ore exporter CAP helped offset oil and credit worries.

The peso rose from a three-month low versus the dollar, as the central bank continued buying dollars to curb the peso.

The all-market IGPA index .IGPA closed 0.1 percent lower at 13,753.75 points, bringing its loss for the week to 1.9 percent, while the blue-chip IPSA index .IPSA ended 0.08 percent lower at 2,919.68 points.

Wall Street fell following news of a $7.8 billion quarterly loss linked to subprime loans at AIG (AIG.N: Quote, Profile, Research), the world's largest insurer, and as oil peaked above $126 on Friday in a fifth straight session of record gains.

"The market has become more pessimistic about oil prices, and clearly if they stay at this level it's going to affect productivity," said Rodrigo Martin, head of market research at Banchile.

Early session losses on the Santiago exchange were pared as steelmaker and iron ore exporter CAP CAP.SN surged 3.3 percent to end the session at 16,185 pesos a share.

CAP stock has been gaining on rising prices for steel and iron ore, driven by booming Asian demand.

Other late session advancing issues included department store Chain Ripley RIP.SN up 2.19 percent and telecommunications company Entel Chile ENT.SN, advancing 2.08 percent.

Dominant air carrier LAN LAN.SN (LFL.N: Quote, Profile, Research) closed 1.42 percent lower, its fifth day of declines amid record high prices for oil.