Chile stocks edge lower, peso retreats

SANTIAGO, March 19 (Reuters) - Chilean stocks traded moderately lower in mixed afternoon trade on Wednesday, while the peso retreated from the prior session's 10-year high against the dollar.

Chile's all-market IGPA index .IGPA traded 0.04 percent lower at 13,170 points, while the blue-chip IPSA index .IPSA eased 0.11 percent to 2,837.

Chilean stocks were calm after the Federal Reserve slashed its benchmark federal funds target interest rate by three quarters of a percentage point on Tuesday.

"It's good that things have calmed down. What's most important is the reduction in volatility," said Gabriela Clivio, head of research with brokerage BBVA.

"Movement in our market depends a lot on activity by the AFPs (big private pension funds), and right now the AFPs and institutional investors seem to be in a wait-and-see mode."

Clivio said the local investment outlook was being moderated by high inflation and possible energy rationing.

On the Santiago exchange, 15 of 40 blue-chip stocks traded lower, three were unchanged and the remaining 22 rose.

Indexes were pulled lower by the retail sector, as regional retailer Cencosud CEN.SN fell 2.47 percent and department store Chain La Polar LAP.SN retreated 2.09 percent. Dominant air carrier LAN LAN.SN slipped 0.59 percent. Modest gains included Banco de Chile CHI.SN with a gain of 0.59 percent.

The Chilean peso weakened 1.7 percent against the dollar on Wednesday, a day after Central Bank President Jose De Gregorio told Congress he did not rule out intervention if speculation were to affect the exchange rate.

The currency CHILJ<CLP=CL> closed at 438.50/438.80 per dollar compared with the prior session's close at 431.20/431.50, paring the peso's advance against the greenback this year to just under 12 percent. (Reporting by Manuel Farias; Writing by Lisa Yulkowski; Editing by James Dalgleish)