Seoul shares fall on industry issues; brokers rise

* KOSPI falls 0.98 pct

* Brokerages up on partial lifting of short-selling ban

* Industry issues down led by Doosan Heavy

(Updates to close)

By Jungyoun Park

SEOUL, May 21 (Reuters) - Seoul shares retreated on Thursday
led by industrial issues including Doosan Heavy Industries
(034020.KS), but brokerages outperformed on the partial lifting
of a short-selling ban.

The Korea Composite Stock Price Index (KOSPI)
finished down 0.98 percent at 1,421.64 points.

"Now that the index has risen quite substantially, investors
are tuning into macroeconomic data and indicators as they are
trying to figure out whether further gains could be justified,"
said Yun Lee, a market analyst at Woori Investment & Securities.

The main KOSPI has risen more than 40 percent since early
March.

"Continued foreign buying comes as a positive sign, but
institutional selling seems to indicate that retail investors are
not putting a whole lot into equity funds. The index will
continued to trade in the low 1,400-point range for some time,"
Lee added.

Institutions were sellers of a net 283 billion won ($226.8
million) and foreign investors bought a net 37 billion won.

Losses were led by shipbuilders and heavy industry issues on
the back of renewed economic worries, after the Federal Reserve
cut its 2009 forecast for gross domestic product and raised its
outlook for unemployment. [ID:nN20492043]

Doosan Heavy Industries fell 6.52 percent, pressured further
by market rumours that Korea Development Bank, which controls
about 11.56 percent of the firm, may sell its stake in a block
deal within the first half of this year, according to analysts.

Daewoo Shipbuilding & Marine Engineering (042660.KS) also
fell 4.81 percent, but shares in Samsung Heavy Industries
(010140.KS) outperformed, edging down 0.65 percent, after the
shipbuilder announced on Wednesday plans to invest in wind power
development.

Meanwhile brokerages rose after news late on Wednesday that
South Korea would lift a temporary short-selling ban next month,
but only for non-financial stocks. [ID:nSP150568]

"The removal of the ban will eventually lead to higher market
turnover...[it] should improve earnings momentum for brokers,"
Merrill Lynch said in ts report dated May 20.

Shares in Samsung Securities (016360.KS) gained 2.73 percent
and Hyundai Securities (003450.KS) rose 1.9 percent.

However a strengthening won KRW= weighed on key tech and
auto exporters.

Samsung Electronics (005930.KS), the world's No.1 memory chip
maker, lost 2.26 percent, and Hynix Semiconductor (000660.KS),
the world's No.2, fell 7.24 percent.

"Hynix fell particularly heavily, and I think it was partly
due to expectations that it is likely to be targetted for
short-selling," said Kim Gee-soo, an analyst at Goodmorning
Shinhan Securities.

"Unlike Samsung Elec, which investors tend to take a long
position on, Hynix draws both long and short positions, as market
participants remain divided about its outlook," Kim added.

Ssangyong Motor (003620.KS) fell 5 percent, weighed down by
local media reports members of its union had launched a strike to
protest massive planned lay-offs.

($1=1247.6 Won)