UPDATE 1-S.Korea Hyundai Heavy picked to buy Hyundai Corp

(Adds stake value, shares)

SEOUL, Sept 29 (Reuters) - South Korea's Hyundai Heavy Industries (009540.KS) was picked on Tuesday to buy a controlling stake in Hyundai Corp (011760.KS), a former Hyundai Group trading arm currently owned by creditors.

Leading creditor Korea Exchange Bank (004940.KS) said in a statement that Hyundai Heavy, the world's biggest shipbuilder, was named a primary negotiation partner for a 50 percent stake plus one share in Hyundai Corp, worth 201.5 billion won ($169 million).

A consortium led by STX Group had also submitted a bid for Hyundai Corp but pulled out of the deal.

It is creditors' second attempt to sell the stake to Hyundai Heavy, which was spun off from the former Hyundai Group into a separate shipbuilding group.

Hyundai Heavy was the sole bidder in the first-round auction for its former sister firm, but talks fell through in May over pricing.

"An acquisition by Hyundai Heavy will help Hyundai Corp boost its trading business and invest in overseas resources development for its long-term growth," KEB said.

At 0213 GMT, Hyundai Heavy shares fell 0.76 percent and Hyundai Corp dropped 1.9 percent, against the wider market's 0.77 percent gain. ($1=1192.0 Won) (Reporting by Rhee So-eui; Editing by Jonathan Hopfner)