Seoul shares down after U.S. fall, fresh econ fear

*KOSPI down 2.1 pct

*Ssangyong E&C down on report Dongkuk pulls bid offer

*Techs retreat after U.S. committee confirms recession

(Updates to midmorning)

By Park Jung-youn

SEOUL, Dec 2 (Reuters) - Seoul shares traded 2.1 percent
lower on Tuesday after big overnight falls in Wall Street,
weighed by a U.S. business cycle committee's announcement on
Monday the U.S. economy dipped into recession a year ago.

The Korea Composite Stock Price Index was down 2.1
percent at 1,036.94 points as of 0209 GMT, up from the earlier
fall of 4.8 percent at the session low of 1,007.26.

"The (U.S. business cycle) committee's recession statement
confirmed what people have long suspected but were not sure of,
and combined with the U.S. factory data, which confirms the
gravity of the ongoing recession, stoked worries about how much
longer the world's largest economy will be submerged in economic
downturn," said Bae Sung-young, a market analyst at Hyundai Sec.

U.S. factory activity dropped in November to its weakest
level since the 1981-82 recession and construction spending
slumped in October, data showed on Monday.

The National Bureau of Economic Research's business cycle
dating committee announced on Monday the U.S. economy slipped
into recession in December, 2007.[ID:nWAT010588]

Analysts said the main index will likely move in a range of
800 to high-1,100 level during the final month of 2008, as
investors follow interest rate decisions by global central banks
and other measures by governments to stimulate the economy.

"Foreign selling is rather light today even after U.S. shares
slid, which is a good sign indicating that investors believe,
despite onging economic concerns, shares are near their bottom.
However we are still way off a meaningful rebound," said Kim
Seung-han, a market analyst at HI Investment & Securities.

Foreigners were netsellers of 35 billion won worth of shares
as of 0130 GMT, snapping four consecutive buying sessions.

Shares in Ssangyong Engineering & Construction (012650.KQ)
dropped 12.78 percent after a local media report that South
Korea's third-biggest steelmaker Dongkuk Steel Mill (001230.KS)
has pulled out of a $321 million offer to buy control of
Ssangyong E&C. A consortium led by Dongkuk was picked as a
preferred buyer of a 50.1 percent stake in Ssangyong E&C in July.

Dongkuk said later on Tuesday it would ask to delay the deal
for the builder for at least a year.

South Korea's key tech exporters retreated after the U.S.
factory activity data, pointing to slowdown in the Asian nation's
second biggest export market.

Samsung Electronics (005930.KS), the world's No.2 maker of
cellphone handsets, was down 3.78 percent and Hynix Semiconductor
(000660.KS), which had risen for five consecutive sessions in the
pervious session, was down 4.87 percent.

Shares in South Korean automakers fell after they reported on
Monday an 8.6 percent drop in combined sales in November, a sign
the global economic slowdown was darkening the industry's
outlook. [ID:nSEO211046]

Shares in the country's No.1 carmaker Hyundai Motor Co
(005380.KS) fell 4.63 percent and its affiliate Kia Motors Corp
(000270.KS) lost 5.02 percent.

(Editing by Keiron Henderson)