S.Korea's Lee wins MP majority, faces party fight

SEOUL (Reuters) - South Korea's new president won the parliamentary majority he needs to push through promised major economic reforms but bitter squabbling in his conservative camp could limit that agenda, experts said on Thursday.

The conservative Grand National Party won 153 seats in Wednesday's vote for the 299-seat National Assembly, short of the commanding lead President Lee Myung-bak might have hoped for after he took office in February, intent on radical change to Asia's fourth-largest economy.

"For the time being, we will be seeing a power struggle between the conservative forces," said Lee Nam-young, a political science professor at Sejong University

President Lee began his five-year term in February pledging to boost growth this year to 6 percent from 5 percent last year, end regulation he said stifled business and open the export-driven economy more to foreign investment.

Conservative stalwarts, unhappy with the way Lee had treated them, led a rebellion in the GNP ahead of the vote. They won 32 seats under the banner of other right-leaning parties.

Local media calculated that Lee's main opponent for the last year's GNP presidential nomination, Park Geun-hye, will have more than 50 allies in the rebel and GNP camps when the new parliament sits at the end of May for a four-year term.

Local newspapers said Lee, who saw several of his closest aides defeated in an election with the lowest voter turnout in the country's history, may have to cut back on more ambitious plans, such as a cross-country canal, because he does not have enough political capital to force them through.

STINGING DEFEAT

Left-of-centre parties which had controlled parliament suffered a stinging defeat in their first loss to the conservatives in the two decades the country has had open, democratic elections to the National Assembly.

The United Democratic Party saw its seats cut by about 40 percent to 81, both its leader and the liberal's candidate for the December presidential election defeated.

Financial markets generally welcomed the win the business-friendly GNP.

"This outcome appears to be a strong mandate for the new administration to implement its 'pro-market and pro-growth' policy platforms," Goldman Sachs said in a research note.

"The victory will likely be a net positive catalyst to the (local stock market) KOSPI, but we believe a sustained rally would require visible progress in policy implementation."

Communist North Korea had turned up the heat with threats and taunts ahead of the election, saying Lee's government was dragging to Korean peninsula to the brink of war.

But voters, accustomed to their irritable neighbor's angry rhetoric, appeared to ignore the barbs in a campaign largely devoid of serious debate on issues.

Lee had been hoping to carry the support from his landslide victory in December to the National Assembly race but has seen his high popularity slip as his government was seen to have bungled early policy initiatives and key personnel appointments.

His optimistic growth targets have also begun to look unrealistic as the global economic downturn starts to bite at home.

"Koreans have become more conservative. We don't trust the liberals but we also didn't want to give Lee Myung-bak too much power," said a medical researcher who voted for the GNP candidate in her central Seoul constituency.

(Additional reporting by Jack Kim and Lee Jiyeon; Editing by Jonathan Thatcher and David Fox)