Chilean President Michelle Bachelet - File

Chile's president announced a US$1 billion (€640 million) subsidy fund on Monday to slow the rise of fuel prices.

Michelle Bachelet said the measure should cut gasolene prices by about US$0.10 (€0.60) a litre - nearly 40 US cents a gallon.

Regular gasolene now sells for an average US$1.30 (€0.83) a litre (€0.83) - about US$4.90 a gallon.

The announcement came on the eve of a planned nationwide strike by nearly 40,000 truckers demanding elimination of fuel taxes.

The truckers' leaders said they would go ahead with the strike despite Bachelet's announcement.

Chile imports more than 95 per cent of the fuels it needs through the state-owned National Petroleum Company.