Chile stocks fall after inflation data, peso firms

SANTIAGO, July 3 (Reuters) - Chilean stock indexes slumped in afternoon trade on Thursday after higher-than-expected inflation sealed views the central bank would raise its key rate again this month, while the peso rose for a second session versus the dollar.

The blue-chip IPSA index .IPSA fell 1.97 percent in afternoon trade to 2,784 points while the all-market IGPA .IGPA index traded 1.61 percent lower at 13,624 points after touching its lowest intraday levels in three months.

Chilean indexes fared worse than others in the region after the June consumer price index rose a stronger-than-expected 1.5 percent, driving 12-month inflation to 9.5 percent, the highest monthly rate since 1994.

"In all, the set of inflation figures for June do not provide any relief to the central bank," said Alberto Ramos, a senior economist with Goldman Sachs in a report on Thursday, who also cited the impact of a weaker peso and higher international oil prices.

"The broad dissemination of inflation pressures will require at a minimum a 25 basis point policy rate hike by the central bank next week, but a 50 basis point increase would be more appropriate."

The prospect of higher interest rates pulled stocks lower across sectors, with declines outnumbering advances by nearly five to one, led by raw materials stocks.

Steelmaker and iron ore miner CAP CAP.SN led percentage losses as its shares slumped 6.04 percent, while chemical and fertilizer exporter Soquimich SQM_pb.SN followed with a loss of 4.32 percent.

The transport sector was also down, with dominant air carrier LAN LAN.SN dipping 1.0 percent and leading shipper Vapores VAP.SN retreating 2.17 percent.

Chile's peso <CLP=CL> appreciated 1.53 percent to end at 509.20/509.70 per dollar after closing at 517.00/517.30 on Wednesday.