Chile peso closes up, stocks slip in sluggish trade

(Adds peso close, trader comments, updates stock figures)

SANTIAGO, Dec 23 (Reuters) - Chile's peso strengthened on
Tuesday as the greenback retreated amid expectations that
Wal-Mart's takeover of Chilean retailer D&S would flood the
local market with more dollars. Stock indexes edged lower in
sluggish, pre-Christmas holiday trade.

The peso CHILJ CLP=CL advanced 0.85 percent to close
at 626.20/626.70 per dollar, compared with Monday's close at
631.50/632.00.

"The market already had a lot of dollar liquidity and the
entry of Wal-Mart into Chile is raising expectations for
further inflows of dollars, which will cause further
depreciation of the greenback," one trader said. "The peso was
even higher, but erratic foreign markets and falling prices
for copper limited gains."

Wal-Mart (WMT.N: Quote, Profile, Research) agreed with leading domestic supermarket
operator D&S DIS.SN on Friday to launch an all-cash takeover
offer valued at about $2.7 billion. The dollar has fallen
sharply in the last month amid increased dollar supplies and a
weaker U.S. economic outlook.

Chile's blue-chip IPSA index .IPSA fell 0.52 percent to
2,322.88 in afternoon trade, while the all-market IGPA .IGPA
slipped 0.34 percent to 11,127.23.

Leading declines included regional retailer Cencosud
CEN.SN, down 2.89 percent, and electric utility Endesa Chile
END.SN, down 2.47 percent.

Steelmaker and iron ore miner CAP CAP.SN led percentage
losses as its shares slid 4.09 percent.

Percentage gain leaders included fertilizer exporter
Soquimich SQM_pb.SN, up 1.06 percent, and regional retailer
Falabella FAL.SN, up 1.12 percent.

Shares in D&S DIS.SNDYS.N, Chile's biggest supermarket
chain, which rocketed up 28 percent Monday on news that retail
mammoth Wal-Mart (WMT.N: Quote, Profile, Research) would launch an all-cash takeover
bid, dipped 0.17 percent to 248.60 pesos a share.

Wal-Mart said on Tuesday its offer of $0.408 per share, or
for $24.48 per ADR, equivalent to 60 D&S shares each, would be
in effect from midnight on Tuesday until midnight Jan. 22.
(Reporting by Froilan Romero, writing by Lisa Yulkowski;
Editing by Jan Paschal)