UPDATE-S.Korea Dongkuk seeks delay in $321 mln builder buy

(Recasts with Dongkuk disclosure)

SEOUL, Dec 2 (Reuters) - South Korea's third-largest steel maker Dongkuk Steel Mill (001230.KS) said on Tuesday it would ask a government agency to delay sealing Dongkuk's $321 million offer for a small domestic builder for "at least one year."

A consortium led by Dongkuk was picked as the preferred buyer of a 50.1 percent stake in Ssangyong Engineering & Construction (012650.KQ) in July.

State debt clearer Korea Asset Management Corp (KAMCO), which is managing the deal, and other creditors had put the stake up for sale.

Dongkuk told the Korea Exchange in a filing that it would submit to KAMCO a revised proposal delaying the planned buyout.

The disclosure came after the Maeil Business Newspaper reported that the steel maker had decided to give up the purchase Ssangyong Engineering due to price differences.

A KAMCO spokesman said the agency would respond as soon as it obtained Dongkuk's notice.

Shares of Ssangyong plunged the daily limit of 15 percent briefly after trade began on worries about a possible collapse of the sale before trimming losses to 11 percent at 5,930 won by 0217 GMT. Dongkuk Steel fell 2 percent.

The Dongkuk-led group had offered 31,000 won per share of the builder for a total of 462 billion won ($321 million), or more than 50 percent higher than Ssangyong's market price at the time.

Ssangyong's share price tumbled more than 60 percent to 6,650 won from the time of the offer to Monday's close. The proposed delay comes after global acquisition markets have been hammered by tight funding conditions and recessions in major economies, while debt-laden conglomerates are seeking to sell assets for cash.

The domestic construction sector also has been strained by high raw material prices and a housing market slump, as well as reduced credit lines from banks.

($1=1439.4 Won)

(Reporting by Kim Yeon-hee; Editing by Jonathan Hopfner)