Seoul shares rise; banks, programme buying help

* KOSPI up 1 pct as programme buying boosts markets

* Banks gain on positive brokerage note, improving outlook

* Tong Yang Life finishes lower than IPO price of 17,000 won

(Update to close)

By Jungyoun Park

SEOUL, Oct 8 (Reuters) - Seoul shares rose on Thursday helped by robust programme buying on the day options expiry fell, with gains in Hynix (000660.KS) on a bullish outlook and banks on positive brokerage notes lending support.

Markets earlier came under selling pressure as investors grew wary before the South Korean central bank's rate decision and comments on Friday, but were ultimately lifted by programme buying, said Samsung Securities analyst Chung Myoung-gi.

"Investors are also cautiously eyeing any comments from the Bank of Korea tomorrow for indications on its monetary stance, especially following Australia's rate hike," said Kwak Joong-bo, a market analyst at Hana Daetoo Securities.

"Third quarter earnings are expected to help sentiment, but concerns about whether companies will keep up growth rates in the fourth quarter, and how the stronger won KRW= will impact their earnings, is a concern," Kwak added.

The Korea Composite Stock Price Index .KS11 (KOSPI) finished up 1.09 percent at 1,615.46 points.

Banking issues including KB Financial Group (105560.KS) advanced helped by positive brokerage notes.

Macquarie said in a note dated October 8 that it expected South Korean banks to post third quarter earnings stronger than the market consensus.

"We reiterate our bullish stance on Korean banks on the back of strong revenue growth driven by strong pickups in net interest margins, improvements in asset quality and expected sector consolidation in 2010," Macquarie said.

KB Financial Group rose 1.34 percent and Shinhan Financial Group (055550.KS) ended up 1.98 percent.

Hynix Semiconductor (000660.KS), the world's No.2 memory chip maker, rose 4.89 percent helped by a Daiwa Securities note dated October 7.

Daiwa maintained its positive rating on South Korean memory chip companies, saying it expected Samsung Electronics (005930.KS) and Hynix to post robust DRAM operating profit margins of a high-teen percentage for the third quarter and margins to improve further in the fourth quarter.

Shares in Tong Yang Life (082640.KS) ended at 14,150 won, substantially below its IPO pricing of 17,000 won.

"Tong Yang Life, the country's No.7 life insurer, is now nearly as expensive as Hyundai Marine & Fire (001450.KS), the number No.2 non-life insurer," Sung added.

Pharmaceutical firm Green Cross (006280.KS) jumped 9.92 percent on hopes that it will post improved earnings from the third quarter thanks to flu vaccine development.

"Green Cross was able to reduced fixed costs substantially by developing its own flu vaccines, while most other South Korean vaccine makers still import materials," said Oh Seung-kyu, an analyst at Tong Yang Securities.

The company announced in July that it had received approval from the Korea Food and Drug Administration to sell a new flu vaccine called GC Flu.

"Its earnings will continue to improve when its H1N1 flu vaccine supply to the South Korean government is reflected from the fourth quarter," Oh added.