UPDATE 2-Hynix seen a 'hard sell' as sole bidder pulls out

* Hynix shareholders to re-start sale process - KEB

* Hyosung walks away; shares jump 15 pct

* Hynix size, cyclical business are hurdles for sale

* KEB seeks local buyer; Hynix R&D seen as 'strategic'

* Sale may clash with other state assets on the block (Adds comment, analysis, updates shares)

By Marie-France Han and Rhee So-eui

SEOUL, Nov 12 (Reuters) - Leading shareholders of South Korea's Hynix Semiconductor (000660.KS) will restart the sale of a controlling stake in the world's No.2 memory chip maker, valued at close to $3 billion, after the sole bidder pulled out.

Failure to find an owner could leave major shareholders with little option but to sell Hynix shares on the market, as they have in small parcels in the past, inevitably denting its share price.

Hyosung (004800.KS), a mid-tier conglomerate with no experience in the memory chip business, said on Thursday it was withdrawing from the process, claiming market rumour and a misunderstanding of its intentions had made a fair acquisition process impossible.

Korea Exchange Bank (004940.KS), Hynix's largest shareholder, said the sale process would be re-started, adding it would target South Korean buyers as Hynix's technology is of strategic importance. Hynix boasts considerable technological advances over its Japanese and Taiwanese rivals.

However, a kickstarted sale is likely to come up against a rash of other South Korean assets hitting the market.

State-owned Korea Development Bank said it would restart the sale of Daewoo Shipbuilding & Marine Engineering (042660.KS) next year -- a signal that South Korea is speeding up the sale of state assets as it seeks to fund growth supporting policies. [ID:nSEO374140] Resource company Daewoo International (047050.KS) and engineering powerhouse Daewoo Engineering (047040.KS) are also on the block, potentially competing for interest in Hynix.

And the government is lining up a raft of other state assets to sell by 2012. [ID:nSEO303606]

Shares in Hyosung jumped by their 15 percent daily limit to a 7-week high, and trade in the stock was nearly six times its 90-day daily average.

Hynix initially jumped more than 6 percent to its highest in four weeks as relieved investors welcomed the end of what had always seemed an unlikely bid.

DOOMED INTEREST