Seoul shares fall; exporters lose, game issues up

* KOSPI sinks 0.94 pct

* Online game issues rally on earnings hopes

* Key exporters fall after gains, U.S. regional factory data

(Updates to close)

By Jungyoun Park

SEOUL, June 16 (Reuters) - Seoul shares fell on Tuesday with
news index compiler MSCI's decision not to upgrade South Korea to
developed market status in its annual review adding pressure, but
online game issues rallied on the back of earnings hopes.

The Korea Composite Stock Price Index .KS11 (KOSPI) ended
down 0.94 percent at 1,399.15 points.

MSCI announced on Monday it was keeping South Korea, which
many analysts expected to be recategorised as a developed market,
in its emerging markets group. [ID:nN15222885]

South Korea would need to make significant progress before an
upgrade, MSCI said.

"U.S. share falls have prompted corrections in regional
markets in Asia. Foreign buying, which has fueled Seoul markets'
latest rally, has halted for now," said Lee Kyoung-su, a market
analyst at Taurus Investment & Securities.

Foreign investors were net sellers of 179.1 billion won
($141.7 million) worth of shares, offloading stocks for a second
straight session after snapping a six-session buying streak on
Monday.

"We might be seeing a change of direction in both markets and
foreign buying trends in the short-term. Some correction
following the rally since March is expected," Lee added.

Shares in online game issues including Neowiz Games
(095660.KQ) rallied on the back of a free rights offer and
growing overseas income hopes.

The Korea Exchange said late on Monday Neowiz shares would
open at 32,950 won on Tuesday amid a free share offering, down 50
percent from Monday's closing price.

"Investors are picking up shares as they seem very cheap
now...also royalty income from China is expected to rise," said
Hwang Seung-taek, an analyst at Hana Daetoo Securities.

Shares in Neowiz Games spiked 14.87 percent.

Its industry peers also advanced, with NCSoft (036570.KS)
climbing 3.3 percent and Actoz Soft (052790.KQ) shooting up 14.86
percent.

Key exporters fell, weighed down by U.S. regional
manufacturing data that dented growing optimism about the world's
largest economy.[ID:nN15186978]

Samsung Electronics (005930.KS), the world's No.1 memory chip
maker, ended down 2.42 percent, pressured further by falls in the
U.S. semiconductor index .SOXX. LG Electronics (066570.KS), the
world's No.3 handset maker, lost 3.67 percent.

Samsung Heavy Industries (010140.KS) dipped but outdid its
peers after a local media report that Royal Dutch Shell (RDSa.L)
had picked it as a preferred bidder for the design of an
estimated 5 trillion won ($3.96 billion) liquified natural gas
(LNG) floating and production facility (FPSO).

A Samsung Heavy spokesman denied the report and said the
results would not be known until July.

Shares in Samsung Heavy edged down 0.99 percent, but
outperformed the transportation equipment subindex's .KS42 1.44
percent loss.

Retail issues roses after data showed sales at top South
Korean department stores in May rose for a third consecutive
month. [ID:nSEO321815]

Lotte Shopping (023530.KS) advanced 2.43 percent, and
Shinsegae (004170.KS) rose 3.89 percent.
($1=1263.9 Won)