* March consumer prices rise 0.4 percent, core up 0.6 pct
* 12-month inflation slows, stirring views of rate cut
* March trade surplus down 63.7 percent vs year earlier (Updates with interest rate poll, details)
By Antonio de la Jara and Simon Gardner
SANTIAGO, April 7 (Reuters) - Consumer price and trade data on Tuesday underlined continued weakness in Chile's economy as it grapples with global crisis, reinforcing expectations for a fresh, though more moderate, central bank interest rate cut.
Chilean consumer prices rose 0.4 percent in March for the first time in five months, while the trade surplus nearly tripled from February -- though it sank versus the same month a year earlier, data showed.
On an annual basis, inflation for the 12 months through March slowed to 5 percent from 5.5 percent for the year through February, which analysts said left room for a further reduction in the central bank's target overnight lending rate.
Chile's central bank slashed its benchmark rate by 6 percentage points in the first quarter. Authorities say it is the steepest first-quarter 2009 rate cut undertaken anywhere in the world.
"The (price) variation in March was due mainly to increases in education, alcohol and tobacco, which were offset partially by falls in transport, housing, water, electricity, gas and other fuels as well as food and nonalcoholic beverages," the National Statistics Institute (INE) said.
The March trade surplus of $950 million, reported by the central bank, was more than double that forecast in a Reuters poll, while inflation advanced slightly less than expected. The trade surplus was $344.5 million in February, when the consumer price index fell 0.4 percent.
Chile's March trade surplus was 63.7 percent lower than a surplus of $2.619 billion for the same month a year earlier, the central bank said.
Exports in March were $3.913 billion, down from $7.05 billion in the same month in 2008, while imports for the month fell to $2.963 billion from $4.43 billion a year earlier.
Analysts polled by Reuters had expected a March trade surplus of $425 million and a 0.45 percent rise in the consumer price index for the month.
RATE CUT EYED
To spur a flagging economy, Chile's central bank cut its target overnight lending rate in the first quarter to 2.25 percent from 8.25 percent. Finance Minister Andres Velasco says it was the world's steepest rates slash for the first quarter.
Analysts eyed the slowdown in 12-month inflation through March as added evidence the bank would cut its rate further at a monetary policy meeting on Thursday, forecasting a 50 basis-point reduction, a Reuters poll showed on Tuesday.
With estimates ranging from no change to a 75 basis-point cut, 12 out of 21 analysts surveyed by Reuters said they expected the monetary authority to cut its target overnight lending rate to 1.75 percent when it meets on Thursday.
One hundred basis points equal one percentage point.
Alfredo Coutinho, senior Latin America economist at Moody's Economy.com, said the fact annual inflation slowed in March coupled with an economic contraction in February supported a deeper 100 basis-point rate cut this week to continue to complement a $4 billion government fiscal stimulus package.
"If we look at the annual inflation rate, there is a decline ... which is consistent with the central bank's expectations ...," he said. "This is going to support another rate cut this week."
"If the central bank wants to continue to join the fiscal stimulus, it has to be sooner rather than later," he added.
Central Bank President Jose de Gregorio said last week the bank would likely cut the benchmark rate further in coming months, but that reductions would be more moderate than the aggressive cuts of the first quarter.
CORE CPI UP 0.6 PERCENT
The core consumer price index, which strips out fuel, fresh fruit and vegetables costs, rose 0.6 percent in March, and was up 6.5 percent in the 12 months through March.
In February, core CPI fell 0.3 percent, and it was up 6.7 percent in the 12 months through February.
Velasco said a raft of data underlining a deep slowdown in Chile, including a 3.9 percent growth contraction in February -- its biggest fall since May 1999 and a fourth monthly drop running -- needed to be taken in the context of global crisis.
"Obviously no-one likes a figure which shows a contraction," Velasco told local radio. "Let us not forget that we are passing through one of the toughest periods and months the world economy has faced in decades," he said.
"We must stay calm and keep a cool head," he added. "2009 will not be an easy year for Chile or the world."
Analysts widely expect zero growth or possibly a contraction this year and the government is revising down its own growth forecasts. (Additional reporting by Carlos Romero, Manuel Farias, Monica Vargas and Maria Jose Latorre; Writing by Simon Gardner; Editing by James Dalgleish)