Chile stocks pare gains, peso retreats

SANTIAGO, March 14 (Reuters) - Chilean stocks pared early gains in afternoon trade on Friday, as U.S. stocks tumbled on revived credit fears, while the peso gave back a chunk of its recent strong appreciation against the dollar.

Chile's all-market IGPA index .IGPA traded 0.17 percent higher at 13,238 points, while the blue-chip IPSA index .IPSA, rose 0.19 percent to 2,850 points.

Chile stocks gained strongly in early trade but pared gains following news that S&P Equity Research cut its rating on Bear Stearns BSC.N to "sell" from "hold," citing the firms long-tern viability.

Locally owned electricity generator Colbun COL.SN led blue-chip losses as its shares slumped 4.35 percent following news it had approved a capital increase of $400 million.

The company reported a loss of $94 million in 1997 on higher costs due in part to scarce supplies of natural gas.

Endesa Spain regional utility giants Enersis ENE.SN and Endesa Chile END.SN helped offset losses with gains of 0.88 percent and 0.75 percent.

Chile's peso CHILJ <CLP=CL> fell 1.28 percent to end at 437.80/438.10 pesos per dollar, compared with the prior session's close at 432.30/432.60.

The peso reduced its year-to-date gain against the dollar to just under 14 percent. Traders said the peso was pressured lower by concerns about the U.S. economy. (Reporting by Lisa Yulkowski, Editing by Chizu Nomiyama,)