Seoul shares fall;results worry clips banks, techs

*KOSPI falls 2.56 pct

*Techs slide on earnings worries

*Banks retreat after drops in European peers

(Updates to midmorning)

By Jungyoun Park

SEOUL, Jan 20 (Reuters) - Seoul shares fell as much as 3
percent on Tuesday, led by banks including Hana Financial Group
(086790.KS) after big drops in their European peers, while
Samsung Elec (005930.KS) fell ahead of earnings this week.

The Korea Composite Stock Price Index was down 2.56
percent at 1,121.24 points as of 0233 GMT, slightly up from the
session low of 1,115.07.

Banking issues led declines after their European peers fell
overnight on earnings worries, following a 0.9 percent loss in
the FTSE 100 index .FTSE on Monday, led by a 67 percent drop in
Royal Bank of Scotland (RBS.L) after it reported the biggest loss
in British corporate history.

Shares in KB Financial Group (105560.KS) fell 4.78 percent,
and Hana Financial Group (086790.KS) lost 5.87 percent.

Samsung Electronics, the world's No.1 memory chip maker,
which is set to report its quarterly earnings on Friday, lost
3.26 percent, weighed down by negative brokerage comments ahead
of the results announcement.

"Our worst case scenario for Samsung Elec's fourth quarter
results...indicates a potential net loss of about 100 billion won
versus our current estimate of net profit of 208 billion won,"
Merrill Lynch said in a report dated January 19.

"Earnings momentum for second half of 2009 could be better
than for first half, but we still anticipate a weak recovery
second half, 2009," it said.

Meanwhile shares in Hankook Tire, the world's seventh-largest
tire maker, tumbled on Tuesday after it reported a quarterly net
loss of 46.7 billion won ($34.41 million) late on Monday.

"Mounting unsold inventories in overseas markets, output cuts
by automakers and subsequent falls in order volumes will continue
to weigh (on Hankook)," Ahn Soo-woong, an analyst at LIG
Investment & Securities, said in a note.

Hankook Tire (000240.KS) dropped 8.27 percent.

Elsewhere construction issues advanced ahead of the financial
regulator's release of a list of viable construction and
shipbuilding firms.

"But to say that the expectations of making the list are
affecting construction issues, is an overstatement. Hyundai,
Daewoo and Samsung, which account for 85 percent of market cap in
this sector, are certainly not under such reviews," said Cho
Joo-hyung, an analyst at Hana Daetoo Securities.

"Expectations over additional support measures by
governments, and the expected increased spending in
infrastructure such as in building roads, railways, and utility
facility, are helping shares today," Cho added.

Hyundai Engineering & Construction (000720.KS) was up 2.4
percent and Daewoo Engineering & Construction (047040.KS) rose
2.9 percent.

Shipbuilders were down, with Daewoo Shipbuilding & Marine
Engineering (042660.KS) falling 2.4 percent and Hyundai Heavy
Industries (009540.KS) losing 4.48 percent, with investors
concerned by still-grim sector outlooks.

(Editing by Keiron Henderson)