Chile stocks fall eyeing oil; peso firms

SANTIAGO, May 9 (Reuters) - Chilean stock indexes traded lower on Friday afternoon, after oil prices spiked to another record high and news of additional U.S. subprime losses refueled global credit worries.

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

The all-market IGPA index .IGPA slipped 0.38 percent to 13,702 points, while the blue-chip IPSA index .IPSA slipped 0.56 percent to 2,906 points.

Wall street and global markets slumped 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.

"Global markets are down sharply. Corporate earnings have been weaker, but the main factor is oil. That's what's driving risk. Airlines have fallen significantly in recent days," said Andres Roman, an analyst with the BICE brokerage in Santiago.

Dominant air carrier LAN LAN.SN (LFL.N: Quote, Profile, Research) saw its shares fall for a fifth day in a row, retreating 1.42 percent in afternoon trade.

Leading Endesa Spain (ELE.MC: Quote, Profile, Research) regional electric utilities weighed, as shares in generator Endesa END.SN fell 1.82 percent and Enersis ENE.SN slipped 0.95 percent.

Losses by retailers were led by regional giant Cencosud CEN.SN, as its shares dipped 2.38 percent.

Blue-chip gains were led by sugar producer Iansa IAN.SN, up 1.64 percent and iron ore exporter CAP CAP.SN, with a gain of 0.52 percent.