Seoul shares end down but foreign buying continues

* KOSPI slips 0.16 pct on North Korea news

* Foreign investors on longest buying spree for over 5 yrs

* Shipping issues rise as Baltic Dry Index jumps

(Updates to close)

By Jungyoun Park

SEOUL, June 2 (Reuters) - Seoul shares dipped on Tuesday,
pressured by reports North Korea was readying a mid-range missile
launch, but shipping firms outperformed and foreign investors
notched up their longest buying spree in over five years.

The Korea Composite Stock Price Index (KOSPI)
finished down 0.16 percent at 1,412.85 points, snapping a
three-session gaining streak.

Foreign investors were buyers of a net 487 billion won
($395.2 million) worth of shares, purchasing for a 13th
consecutive session, their longest buying streak since April,
2004, according to the Korea Exchange.

North Korea is preparing to test-fire a mid-range missiles
capable of hitting all of South Korea and most of Japan, South
Korea's Yonhap news agency quoted a lawmaker as saying on Tuesday
after a defence briefing.[ID:nSEO186618]

"North Korea is an uncertainty, and whenever there is
negative news related to it, markets will react, but as always,
the impact will be short-lived," said Kim Young-june, a market
analyst at SK Securities.

Shipping companies rose after the Baltic Dry Index .BADI,
which tracks costs of shipping key commodities, jumped 5.35
percent.

Hanjin Shipping (000700.KS) ended up 4.76 percent and Hyundai
Merchant Marine (011200.KS) rose 0.19 percent.

Daewoo Engineering (047040.KS) advanced after news South
Korea's Kumho Asiana Group was granted more time to find new
investors in the firm.[ID:nSEO17403]

Analysts said hopes were brewing that Daewoo Engineering may
soon be offered up for sale as put option agreements struck by
Kumho Asiana in its purchase of the firm had pressured the
group's financial outlook.

Shares in Daewoo Engineering shot up 14.8 percent, while
Kumho Industrial (002990.KS), a key Kumho Asiana Group unit, rose
2.46 percent.

OCI (010060.KS), formerly DC Chemical, jumped 7.62 percent
on hopes that the second quarter would mark a bottom for the
polysilicon maker.

The global price of polysilicon, a key material used in solar
cells that transform sunlight into electricity, has halved since
January. [ID:nN28530392]

"OCI's chemical businesses, other than polysilicon, have
improved recently and there are hopes among investors that the
solar energy industry might hit its bottom shortly," said Jey
Lee, an analyst at Daewoo Securities.

But some key bluechips retreated after recent rallies, with
LG Electronics (066570.KS), the world's No.3 handset maker,
losing 1.26 percent and Samsung Electronics (005930.KS) declining
0.36 percent.