Seoul stocks slump; LG leads exporters lower

(Updates to mid-morning)

By Kim Soyoung

SEOUL, Jan 16 (Reuters) - Seoul stocks fell 2.6 percent to
yet another five-month low on Wednesday, led by exporters such as
LG Electronics after Citigroup's record loss and dismal U.S.
retail sales data fuelled fears about a U.S. economic recession.

The index is now headed for five consecutive sessions of
falls and down 18 percent from its peak in November, hit by
snowballing concerns that problems with U.S. subprime mortgages
would push South Korea's No.2 export market into a recession.

Firms that make the bulk of revenues abroad fell, including
LG Electronics Inc (066570.KS), the world's No.5 mobile phone
maker, which declined 2.49 percent to 89,900 won.

LG.Philips LCD Co Ltd (034220.KS), the world's second-biggest
maker of large-size LCD panels, slumped 4.37 percent to 43,750
won, while Hynix Semiconductor Inc 000660.Ks slid 3.74 percent
to 21,950 won.

"The question is whether the banks will continue to announce
such big writedowns in the next quarters, or they are taking one
bold writedown this time. More people are fearing this is far
from over," said Rho Y.S., an analyst at Hyundai Securities.

"Investors will have to brace for a freefall in the next
three months at least, when it's expected that more negative
economic news and banks' woes will be unveiled."

The Korea Composite Stock Price Index .KS11 fell 2.56
percent to 1,702.32 points as of 0043 GMT, its lowest since Aug.
20.

All three major U.S. stock indexes plunged more than 2
percent on Tuesday, after Citigroup (C.N) slashed its dividend
after writing down $18.1 billion in losses tied to subprime loans
and other risky debt, indicating the crisis is far from over.

Adding to the grim picture, U.S. retail sales fell
unexpectedly in December to close out the weakest year at the
cash register since 2002. [ID:nN15499138]

Steel makers and shipbuilders also dropped as concerns grew
that a faltering global economy would dampen demand for
construction and new vessels.

POSCO Co Ltd (005490.KS), the world's fourth-biggest
steelmaker, lost 3.27 percent to 532,000 won.

Hyundai Heavy Industries Co Ltd (009540.KS), the world's top
shipbuilder, dropped 5.58 percent to 347,000 won.

(Reporting by Kim Soyoung; Editing by Keiron Henderson)