Seoul shares down as steelmakers, airlines retreat

*KOSPI ends 1.42 pct lower

*Steel, airlines decline

*SK Broadband rallies on restructuring expectations

(Updates to close)

By Jungyoun Park

SEOUL, Feb 16 (Reuters) - Seoul shares fell on Monday led by
steelmakers and airlines, which were weighed down by the weaker
won currency and grim January export data, but SK Broadband
(033630.KQ)'s strong gains lent the market support.

The Korea Composite Stock Price Index fell 1.42
percent to 1,175.47 points.

"The markets lack clear upward momentum, as neither the
macroeconomic picture nor earnings are set to turn around anytime
soon," said Won Jong-hyuck, an analyst at SK Securities. adding
that big political events this week, including North Korean
leader Kim Jong-il's birthday on Monday and Hillary Clinton's
visit to South Korea on Thursday, kept investors relatively
cautious.

"It is not so much that the investors think the North's
missile launch, should it happen, will permanently damage our
markets. But they want to avoid the one or two-day falls normally
seen after such an event," Won added.

"The weaker won currency was a negative factor. But Kosdaq
.KQ11 stocks were able to rise thanks to solid retail and
domestic institutional interest, as these domestic-focused,
small-to-medium cap issues, are seen as more sheltered from
external factors such as currency volatility," said Lee Jae-mahn,
a market analyst at Tong Yang Securities.

The major gainers on the Kosdaq included SK Broadband
(033630.KQ), a broadband affiliate of SK Telecom (017670.KS),
which rose 11.93 percent as expectations grew that it would
benefit from restructuring efforts by controlling shareholder SK
Telecom amid the ongoing merger process between KT (030200.KS),
the country's top fixed-line and broadband firm, and KTF
(032390.KS).

"As the KT and KTF head for a merger, SK Telecom is feeling
greater urgency to restructure its wireless and fixed-line
telecommunications businesses," said Stan Jung, an analyst at
Woori Investment & Securities.

"It will...eventually try to merge unlisted SK Telink, in
which it holds a majority stake, and SK Broadband (033630.KQ)."

SK Telink is an international call service provider.

But airlines retreated, pressured by the won's drop against
the dollar and grim January trade data.

"Airlines are one of the most consumer sentiment-sensitive
sectors, and their falls today are reflective of worsening
macroeconomic environments," said Han Byoung-hwa, an analyst at
Hyundai Securities.

South Korean exports in January performed worse than
initially estimated as revised figures from the customs agency
showed on Monday shipments for the month dropped a record 33.8
percent from a year earlier.[ID:nSEO90398]

Korean Air Line (003490.KS) fell 4.15 percent and Asiana
Airlines (020560.KS) lost 1.54 percent.

Steel issues, which are also sensitive to the foreign
exchange markets as it relied heavily on imported raw materials,
retreated, with POSCO (005490.KS) declining 3.86 percent.

But shares in C&Heavy Industries 008400.KS jumped 14.9
percent on Monday after news late on Friday that creditors had
picked lead managers for the sale of the troubled shipbuilder.

"We have selected Lazard (LAZ.N) and Mirae Asset Securities
(037620.KS) as our lead managers," said a spokesman at Meritz
Fire & Marine (000060.KS), one of C&Heavy's major creditors.