Seoul shares firm; techology issues lend support

* KOSPI trades firm, up 0.2 pct

* Techs continue to lead gains amid earning hopes

* Shippers fall on fresh sectoral fears
(Updates to mid-morning)

By Jungyoun Park

SEOUL, July 7 (Reuters) - Seoul shares firmed in late morning
trade on Tuesday as upward momentum on positive earnings
expectations continued, with gains led by Samsung Electronics
(005930.KS), but shippers fell on growing sectoral fears.

The Korea Composite Stock Price Index (KOSPI) was up
0.16 percent at 1431.20 points as of 0204 GMT.

"Investors are making selective picks with buying appetite
concentrated around technology issues following Samsung
Electronics' bullish earnings forecasts yesterday," said Hwang
Keum-dan, a market analyst at Samsung Securities said.

Decliners outnumbered gainers in the Seoul stock market by
440 to 301, while 90 traded flat.

"If technology companies also give out strong third-quarter
guidance, markets may make a more meaningful rebound. Investors
are likely to take a more cautious approach ahead of earnings
season," Hwang added.

Samsung Electronics, the largest counter on the main KOSPI
accounting for about 10 percent of its market cap, climbed 1.89
percent. LG Electronics (066570.KS) advanced 4.47 percent.

The world's No.3 handset maker early on Tuesday said it
planned to invest $100 million in Mexico in the next three years
to expand its market presence and workforce there. [ID:nSEO4896]

Korea Exchange Bank (KEB) (004940.KS) rose nearly 4 percent
after a local media report said South Korea's National
Agricultural Cooperative Federation, known as Nonghyup, was
considering purchasing the lender.

Nonghyup is set to undergo a reshuffle and is seeking to buy
a bank, the Financial News said, adding that KEB was a likely
target.

But a spokesman for Nonghyup denied the report as untrue,
saying it lacked the capacity for a bid.

"Nonghyup is said to have a lot of debt and bad assets on its
balance sheet ... which is why I think the report is
preposterous. Little synergy is expected between the two, and if
Nonghyup does approach KEB, it would in fact be negative for the
bank," said Hwang Huhn, an analyst at Woori Investment &
Securities.

Shipping firms fell after a local media report that they were
seeking to sell their vessels to a fund set up by Korea Asset
Management Corp (KAMCO) in order to raise funding amid a
liquidity crunch.

The report said Hanjin Shipping (000700.KS) was trying to
offload 20 ships, Hyundai Merchant Marine (011200.KS) eight
ships, and STX Pan Ocean (028670.KS) six vessels.

A KAMCO spokesman told Reuters the state debt clearer was in
talks with domestic shippers but declined to give more details. A
Hanjin Shipping spokeswoman confirmed the report.

Hanjin Shipping was down 1.72 percent, Hyundai Merchant
Marine lost 1.44 percent, while STX Pan Ocean declined 3.06
percent.
(Additional reporting by Kim Yeon-hee and Shin Jieun; Editing by
Chris Lewis)