Seoul shares fall 1 pct led by techs, banks

* Foreign, institutional investors sell

* Hyundai Department, airlines buck losing trend

(Updates to close)

By Jungyoun Park

SEOUL, Aug 31 (Reuters) - Seoul shares fell on Tuesday led by banking and technology issues including Hynix (000660.KS), but Hyundai Department (069960.KS) gained on the strong IPO pricing of Hyundai Homeshopping, in which it is the majority shareholder.

The Korea Composite Stock Price Index .KS11 (KOSPI) finished down 0.99 percent at 1,742.75 points.

"Shares fell under the influence of negative trading in the U.S. market overnight, and continued economic worries are weighing on sentiment and sending key blue chips lower," Lee added.

Foreign investors were sellers of a net 36.8 billion won ($30.90 million) worth of stocks, and institutions offloaded a net 28.8 billion won.

Memory chip issues underperformed after a 2.5 percent loss in the U.S. Philadelphia semiconductor index .SOX.

"Pessimistic views on the economy are weighing on the broader technology sector. Memory chips were hit particularly badly due to recent bearish comments from Intel (INTC.O)," said An Seong-ho, an analyst at Eugene Investment & Securities.

Intel Corp warned late last week that third-quarter revenue could fall short of its own estimates by more than $1 billion, reinforcing doubts about the strength of a technology sector recovery.[ID:nN27260125]

Shares in Samsung Electronics (005930.KS), the world's No.1 memory chip maker, fell 2.6 percent and Hynix Semiconductor, the world's No.2, dropped 6.2 percent.

Shares in LG Display (034220.KS), the world's No.2 flat panel maker, declined 2.9 percent and LG Electronics (066570.KS), the world's third-biggest handset maker, declined 1.6 percent.

But Hyundai Department Store (069960.KS) outperformed, ending flat, after Hyundai Homeshopping priced its 270 billion won ($225.9 million) initial public offering at the top of the indicative range. [ID:nTOE67T054]

Airline issues rose on the back of expectations of strong inflows of Chinese tourists, analysts said.

"The rising number of Chinese passengers coming into South Korea...will certainly help air carriers' profits," said Yun Hee-do, an analyst at Korea Investment & Securities.

Shares in Korean Air Line (003490.KS), South Korea's top air carrier, rose 1.5 percent and Asiana Airlines (020560.KS) advanced 3.2 percent.

Banking stocks retreated following a rally in the previous session.

KB Financial Group (105560.KS), the parent group of South Korea's biggest commercial lender Kookmin Bank, shed 1.8 percent and Hana Financial Group (086790.KS) retreated 3.4 percent.