Seoul shares edge lower; but LG Micron, Innotek up

*LG Micron, LG Innotek up on merger talks

*Hyundai, Kia fall on partial strike launch

*Steelmakers fall on won's weakness, import cost worries

(Updates to midmorning)

By Park Jung-youn

SEOUL, Aug 28 (Reuters) - Seoul shares traded slightly lower
on Thursday after opening 0.6 percent higher on surprisingly
strong U.S. durable goods data, with losses by steelmakers and
car makers pushing the benchmark index lower.

The Korea Composite Stock Price Index .KS11 was down 0.45
percent at 1,487.16 points as of 0208 GMT.

"Stronger-than-expected U.S. data and gains in U.S. mortgage
lenders overnight initially helped the appetite for shares in
Seoul markets today," said Kim Joong-won, a market analyst at
Solomon Investment & Securities.

"However we are still seeing Seoul market's major blue chip
shares underperforming as second half outlook worries still
pervade the markets. Also with dollar strength, foreign investors
are increasingly preferring dollar-denominated assets," Kim added.

Foreign investors were net sellers for an eighth consecutive
session, offloading a net 10.2 billion won worth of shares as of
0124 GMT.

However shares in LG Micron 016990.KQ and LG Innotek
(011070.KS), LG Group's electronics parts makers, rose after the
firms told the Korea Exchange they were considering a merger.

Shares in LG Micron were up 3.38 percent to 35,150 won and LG
Innotek was up 1.88 percent to 48,700 won.

Some tech issues such as Hynix Semiconductor (000660.KS) and
LG Display (034220.KS) outperformed against the benchmark index
after their latest losses and after U.S. data on new orders for
big-ticket manufactured items exceeded expectations.

Hynix was up 0.25 percent to 19,850 won and LG Display was up
0.36 percent at 27,500 won.

However auto makers fell across the board after unionised
workers at Hyundai Motor (005380.KS) and Kia Motors (000270.KS)
on Wednesday launched another round of partial strikes over a
wage deal and working conditions.[ID:nSEO51280]

Hyundai Motor fell 2.61 percent to 71,000 won and Kia Motors
lost 2.93 percent to 13,250 won.

Steelmakers also fell with continued weakness in the won
currency fuelling worries about importing cost of raw material,
while steel product prices are set to weaken on prospects of
lower demand.

Shares in POSCO (005490.KS) fell 1.17 percent to 465,500 won
and Hyundai Steel (004020.KS) lost 0.58 percent to 51,600 won.

Meanwhile some financials gained after their U.S. peers
advanced led by mortgage lenders, sending shares in Shinhan
Financial Group (055550.KS) 1.01 percent higher to 49,850 won and
Samsung Securities (016360.KS) up 2.35 percent to 61,000 won.

Kookmin Bank 060000.KS edged 1.01 percent higher to 59,800
won after South Korea's top commercial lender said on Wednesday
that it completed the acquisition of a 23 percent stake in
Kazakhstan bank CenterCredit for $500 million, the first step in
becoming a controlling shareholder. [ID:nLR629756]