Seoul shares dip; Hyundai Motor down on M&A report

* KOSPI falls amid econ worry, foreign investors sell

* Hyundai Motor tumbles on Hyundai E&C bid report (Updates to mid-morning)

By Jungyoun Park

SEOUL, July 1 (Reuters) - Seoul shares retreated on Thursday after falls on Wall Street, with losses led by Hyundai Motor (005380.KS) on Hyundai E&C (000720.KS) bid report, but stronger-than-expected export data helped limit losses.

The Korea Composite Stock Price Index .KS11 (KOSPI) was down 1.3 percent at 1,676.65 points as of 0202 GMT.

"Shares are down following U.S. shares' losses, but I'd have to say Seoul shares are still outperforming, helped in particular by strong set of domestic economic data, such as the export data that came out today," said Lee Sun-yeb, a market analyst at Shinhan Investment Corporation.

South Korean exports in June grew more than expected over a year earlier despite fears that debt problems in Europe may have started curbing global demand.[ID:nSEV000088]

Foreign investors were sellers of a net 90.8 billion won ($74.3 million) worth of stocks, poised to sell for a second session.

Shares in Hyundai Motor (005380.KS) tumbled 4.84 percent after a report that its parent group may bid for a $2.1 billion stake in Hyundai Engineering & Construction (000720.KS).

"The acquisition report is weighing on sentiment ... Financial burden probably is not an issue. It has more than enough cash buy ... But Hyundai Motor also already has a construction unit, Hyundai Amco," said Choi Dae-sik, an analyst at HI Investment Securities.

Shares in Kia Motor (000720.KS), also a unit of Hyundai Motor Group, declined 2.29 percent, while Hyundai Merchant Marine (011200.KS) jumped more than 10 percent.

"There are vague expectations about how Hyundai Merchant Marine will be dealt with, as Hyundai Engineering's stake is quite big," said Jee Heon-seok, an analyst at NH Investment & Securities. "Some optimistic investors seem to be betting on Hyundai Motor's taking over the stake."

Hyundai Engineering controlled 7.22 percent of Hyundai Merchant Marine, according to a regulatory filing in May.

Elsewhere shares in LG Display (034220.KS) retreated amid growing concerns about its quarterly earnings.

"Shipments during second quarter was not as strong as earlier expected," said Lee Min-hee, an analyst at Dongbu Securities, adding that operating profit was forecast to be about 200 billion won lower than earlier forecast of around 900 billion won.

Shares in the world's No.2 maker of flat panels were down 3.66 percent. (Editing by Jan Dahinten)