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UPDATE 1-Spain's Telefonica sells Atento to cut debt

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* Bain Capital to buy Atento in 1 billion euro deal

* Telefonica to provide Bain 110 mln euros in financing

* Sale expected to close before year-end

(Adds details and background)

MADRID, Oct 12 (Reuters) - Spain's Telefonica hasreached a 1 billion euro ($1.3 billion) agreement to sell itsAtento call centre business to investment firm Bain Capital aspart of a plan to sell assets and cut debt.

The sale follows the Spanish telecom operator's failedattempt to list Atento last year.

Telefonica is under pressure to raise funds and reduce a 57billion euro debt pile as it struggles to keep its investmentgrade rating while its crisis-hit home market suffers.

As part of the agreement, Telefonica will provide Bain with110 million euros of financing, it said in a statement to thestock market regulator.

Telefonica, which said it hoped to close the sale before theend of this year, needs to raise between 7 billion and 8 billioneuros a year through 2015 to cope with debt repayments.

It is also preparing to spin off its German O2 subsidiaryand has said it was also considering listings in Latin America.

($1 = 0.7726 euros)

(Reporting By Tracy Rucinski; Editing by Hans-Juergen Peters)

((tracy.rucinski@thomsonreuters.com)(+34 91 585 2153)(ReutersMessaging: tracy.rucinski.thomsonreuters.com@reuters.net))

Keywords: TELEFONICA ATENTO/