Seoul shares pare 6 pct gains as auto stocks slide

(Updates to afternoon)

By Park Jung-youn

SEOUL, Nov 25 (Reuters) - Seoul shares gave up most of an initial 6 percent gain to be flat in Tuesday afternoon trading, as auto shares fell on output cut reports and deepening concerns about the sector, while banks faltered after early gains.

The Korea Composite Stock Price Index stood 0.5 percent higher at 975.07 points as of 0504 GMT after an earlier run up to 1,029.46 points after other world markets responded buoyantly to a rescue plan for battered U.S. bank Citigroup.

Institutions were sellers of a net 74.3 billion won ($50.08 million), while foreign investors turned net sellers of South Korean stocks after initial purchase.

"Earlier gains on Citigroup bailout news were not sustained as fundamental worries about the economy and financial markets still exist. Institutions sold stocks taking advantage of earlier big gains," said Lee Sun-yeob, a market analyst at Goodmorning Shinhan Securities.

"Auto industry issues in particular are retreating as sectoral worries deepen with the prospects of lengthier economic downturn, while builders continue to be under pressure on grim real estate sector outlook," Lee added.

Kia Motors (000270.KS) continued falling for a second-straight session, down 12.07 percent, after it said on Monday South Korea's No.2 car maker was paying off 300 million euros ($378.5 million) worth of debt in cash as it had difficulty issuing bonds to refinance the debts.[ID:nSEL000361]

Meanwhile a local newspaper reported on Monday that Hyundai Motor (005380.KS) and Kia have started to cut their production by removing shifts at the weekend.

Hyundai Motor (005380.KS), Kia's larger affiliate and the world's No.5 auto maker combined with Kia, was down 9.8 percent.

Other auto industry related shares were also down, with Hyundai Mobis (012330.KS), the maker of car parts, down 12.92 percent and Hankook Tire (000240.KS) down 9.26 percent.

However some industrials, which had undergone sharper falls lately rebounded.

POSCO (005490.KS), the world's No.4 maker of steel, was up 5 percent.

($1=1483.5 Won)

(Editing by Keiron Henderson)