Seoul shares retreat as economic outlook weighs

(Updates to mid-morning)

SEOUL, July 8 (Reuters) - Seoul shares fell by mid-morning on
Wednesday as top technology stocks took a breather after recent
gains, while renewed doubts over global economic recovery weighed
on appetite for stocks.

Talk of another U.S. government stimulus package and
uncertainty over the corporate outlook ahead of earnings season
made the KOSPI retreat after steady gains in July, analysts said.

"Talk of more stimulus spending is making investors nervous,"
said Kim Seong-joo, an analyst at Daewoo Securities.

"Government spending worldwide has powered the recovery in
the market and given the impression that fundamentals have
improved, but it will take longer for things to return to
normal."

As of 0152 GMT, the Korea Composite Stock Price Index
(KOSPI) was down 0.65 percent at 1,424.84 points. Its Tuesday
finish was just 1.5 points away from the year's earlier closing
high reached in late May.

Leading technology companies Samsung Electronics (005930.KS)
and LG Electronics (066570.KS) slid after rising this week on
expectations of strong earnings. Samsung fell 0.77 percent and
and LG lost 1.54 percent.

Shipping companies remained under pressure on the view the
downturn-hit sector's suffering could be prolonged by the weak
economic recovery. Hanjin Shipping (000700.KS) fell 1.78 percent
and Korea Line (005880.KS) dropped 4.07 percent.

On the smaller Kosdaq market, Internet security companies
jumped on news of simultaneous hacking attacks against domestic
major sites. Ahnlab Inc (053800.KQ) advanced by the market's 15
percent daily limit and ESTsoft Corp (047560.KQ) climbed 2.77
percent against the Kosdaq's .KQ11 0.34 percent fall.

The International Monetary Fund late Tuesday updraded its
forecast for the South Korean economy in 2009, predicting a 3
percent contraction -- compared with its previous forecast for a
4 percent drop. [ID:nHKG84548]

U.S. stocks fell to their lowest level in 10 weeks on
Tuesday, as talk of a second government stimulus plan heightened
fears for the economy.
(Reporting by Rhee So-eui; Editing by Chris Lewis)