Seoul shares rise; builders, LS Industrial rally

* KOSPI gains 0.64 pet

* Builders surge following river revamp plans

* LS Industrial up after JV plan with German chipmaker

(Updates to mid-morning)

By Jungyoun Park

SEOUL, June 9 (Reuters) - Seoul shares rose on Tuesday, with
construction issues rallying on the government's $18 billion plan
to revamp major rivers, while LS Industrial (010120.KS) surged
after news of a joint venture plan with a German chipmaker.

The Korea Composite Stock Price Index (KOSPI) was up
0.64 percent at 1,402.26 points as of 0156 GMT.

"Growing economic hopes and domestic issues, such as
government plans to revamp major rivers, are sending shares
higher. Foreign investors are continuing to buy, which is a
positive signal," said Suh Dong-pil, a market analyst at Hana
Daetoo Securities.

"Ahead of futures and options expiries later this week, we
are seeing robust futures buying activity, as the basis level in
futures markets is good," Suh added.

Construction shares led gains after the government said it
had finalised a plan to spend a combined 22.2 trillion won
($17.79 billion) until 2012 to develop four of the country's
major rivers. [ID:nSEO105850]

"Large construction companies are expected to form a
consortium, and will probably evenly win construction orders from
the river project," said Dongbu Securities analyst Hong Seo-yeon,
in a report on Tuesday, naming Hyundai Engineering & Construction
(000720.KS) and Kyeryong Construction (013580.KS) among the chief
potential beneficiaries of the initiative.

Hyundai E&C wwa up 2.59 percent, while Kyeryong Construction
jumped 12.53 percent.

LS Industrial System Co jumped 4.89 percent after a South
Korean electrical power equipment supplier on Tuesday said it
would set up a 40 billion won ($32.06 million) semiconductor
joint venture with German chipmaker Infineon Technologies AG
(IFXGn.DE) in August.[ID:nSEO59791]

In a filing with the Korea Exchange, LS Industrial said it
would invest 21.6 billion won in the venture, which would produce
power semiconductors.

Banks rose following their latest losses. KB Financial Group
(105560.KS) advanced 1.12 percent and Hana Financial Group
(086790.KS) rose 2.64 percent.

Growing earnings hopes and strengthening views that the flat
panel industry is headed for a turnaround, sent some technology
issues higher.

Samsung Electronics (005930.KS) gained 1.04 percent and LG
Electronics (066570.KS) was up 0.86 percent.

(Editing by Chris Lewis)