Chile stocks slide 1 pct; peso hits 4-month high

By Aaron Nelsen

SANTIAGO, Oct 27 (Reuters) - Chile's benchmark IPSA index .IPSA skid nearly 1 percent on Tuesday, dragged down by retail shares as investors braced for a host of third-quarter earnings, analysts said.

Chile's benchmark IPSA index .IPSA extended its recent slide to 3,372.17, while the all-market .IGPA closed 0.8 percent lower to 15,882.46.

"It's been a bad day for the local exchange," said Rodrigo Andaur, head of research for FIT Corredores de Bolsa. "In general there was some profit taking, and the market was also influenced by volatility on global bourses."

Local pension funds, near their legal investment limits, continue to divest shares in Chile's market and invest abroad, traders said.

The IPSA was dragged lower on retail and commodity stocks, including a 3.5 percent drop by Soquimich SQM_pb.SN, Chile's leading exporter of fertilizer and the world's biggest producer of iodine and lithium. SQM closed at 19,871 pesos.

Earlier in the day JP Morgan downgraded its recommendation for SQM from neutral to below market value.

Chilean retailer La Polar LAP.SN, also fell more than 3 percent to close at 2728.3 pesos.

Limiting losses was Chilean industrial conglomerate Copec COP.SN, one of the world's biggest wood pulp exporters, up more than 1 percent to 7,216.1 pesos.