Seoul shares up 1 pct, shrug off Spain downgrade

* KOSPI rises for a fourth session on foreign buying

* Telcos, autos lead gains; memory chip issues fall (Updates to close)

By Jungyoun Park

SEOUL, May 31 (Reuters) - Seoul shares rose on Monday, shrugging off Fitch's downgrade of Spain's credit rating, with firm gains by auto and telecommunications issues including Ssangyong Motor (003620.KS) and SK Telecom (017670.KS) boosting the market.

Analysts said that following the market's sharp losses since April, investors had grown somewhat immune to Euro zone negatives.

"When real fears about Greece emerged, the index was at a high for the year. The Spain downgrade is not good, but the market has already suffered from and developed some immunity to such news," said Kim Hyoung-ryoul, a market analyst at NH Investment & Securities. "Also, the trilateral summit of South Korea, Japan, and China, while not offering a clear resolution to the North Korea issue, helped confirm a consensus that war in peninsula is wanted by none. This reinforced the existing view that war is highly unlikely."

Moody's Investors Service said on Monday that South Korea's geopolitical defences and economic fundamentals should prove strong enough to withstand a period of heightened tensions. The stable outlook for Korea's current rating remained appropriate, it added.

Foreign investors were buyers of a net 190.9 billion won worth of stocks, picking up stocks for a two consecutive session.

The Korea Composite Stock Price Index .KS11 (KOSPI) finished up 1.14 percent at 1,641.25 points.

Telecommunications issues outperformed, with SK Telecom (017670.KS), South Korea's top wireless carrier, gaining 2.51 percent.

"While the mood has stabilised, uncertainties still abound in the market and the preference of investors for defensive issues has grown," said Choi Nam-gon, an analyst at Tong Yang Securities. "Wireless carriers are also expected to post solid results in the second quarter on the back of lower marketing costs. The growing popularity of smart phones is also positive."

Carmakers also lifted the market, led by Ssangyong Motor (003620.KS), which jumped 14.62 percent after news late on Friday that France's Renault SA (RENA.PA) and India's top utility vehicle maker Mahindra were in the running to buy the troubled SUV maker. [ID:nTOE64R01B]

"Renault's involvement comes as a positive surprise. It's a well-established global player and the view is if it buys Ssangyong it will be positive for Ssangyong's longer-term growth," said Ahn Sang-joon, an analyst at Tong Yang Securities,.

Hyundai Motor (005380.KS) ended up 1.82 percent.

Memory chip issues declined after the key U.S. semiconductor index .SOXX lost 1.63 percent.

Hynix Semiconductor (000660.KS) fell 2.14 percent, hit further after the world's No.2 memory chip maker said early on Monday that it would acquire shares of its Chinese unit from partner Numonyx for 522 billion won ($437 million). [ID:nSEL003107]

"News of Hynix's investment in Numonyx is weighing as it points to a potential liquidity contraction for the firm," said Shin Hyun-joon, an analyst at Tong Yang Securities.