Seoul shares retreat as exchange rate weighs on exporters
* South Korean won hits 17-month high
* Bank of Korea cuts GDP growth outlook
* Defensive plays favoured
SEOUL, Jan 11 (Reuters) - Seoul shares slid on Friday morning, hurt as the South Korean won's rise to a 17-month high pushed exporters lower and by worries over slowing local economic growth.
The Korea Composite Stock Price Index (KOSPI) was down 0.8 percent at 1991.44 points as of 0248 GMT, sinking to negative territory shortly after market open. It has lost about 2 percent since marking a nine-month high on Jan. 2.
"Sentiment has quickly soured due to the exchange rate, with investors offloading exporters and other cyclicals," said Cho Sung-joon, an analyst at NH Securities.
The local currency rose to a 17-month high of 1,056.1 against the dollar, tracking gains by other risk-linked currencies after the European Central Bank said the common currency zone's growth will gradually recover later this year.
Adding to worries about slower growth, Korea's central bank revised down its outlook for South Korea's GDP growth in 2013 to 2.8 percent from 3.2 percent.
The Bank of Korea held interest rates at 2.75 percent, in line with expectations.
Cho added that sentiment was also hurt after China's annual consumer inflation overshot market expectations to rise to a seven-month high of 2.5 percent in December, dampening chances of further policy easing by China.
Blue-chips were mostly down, with tech heavyweight Samsung Electronics Co Ltd slipping 0.7 percent.
Auto shares lost ground on concerns that Japanese competitors will benefit from both a weakening yen and a strengthening won.
Hyundai Motor Co dropped 0.7 percent while sibling Kia Motors Corp fell 1.8 percent.
Investors favoured defensive plays, such as food and beverage makers. CJ Cheiljedang Corp rose 1.1 percent while Lotte Confectionary Co Ltd gained 2.6 percent.
Local institutional investors sold a net 185.7 billion Korean won ($175.13 million) worth of KOSPI shares near mid-session.
Declining shares outnumbered winners 489 to 293. The KOSPI 200 benchmark of core stocks was down 0.9 percent, while the junior KOSDAQ edged 0.2 percent lower. ($1 = 1060.3500 Korean won) (Reporting by Joyce Lee; Editing by Edwina Gibbs)