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

* 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 has reached a 1 billion euro ($1.3 billion) agreement to sell its Atento call centre business to investment firm Bain Capital as part of a plan to sell assets and cut debt.

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

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

As part of the agreement, Telefonica will provide Bain with 110 million euros of financing, it said in a statement to the stock market regulator.

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

It is also preparing to spin off its German O2 subsidiary and 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)(Reuters Messaging: tracy.rucinski.thomsonreuters.com@reuters.net))