UPDATE 1-Doosan shares jump on talk of Daewoo bid drop

SEOUL, Aug 18 (Reuters) - Shares in Doosan Group units climbed on Monday on market talk that the South Korean heavy industry group would drop its bidding interest for Daewoo Shipbuilding & Marine Engineering (042660.KS).

The talk follows last week's announcement by the Korea Development Bank, a top shareholder in Daewoo Shipbuilding that a public notice for sale of Daewoo will likely come out this week.

"There are rumours going around the market that Doosan is dropping its bid intentions for Daewoo Shipbuilding and it's prompted a rally in group shares," said Cho In-kap, an analyst at Goodmorning Shinhan Securities.

A spokesman for Doosan Group declined to comment.

The Daewoo deal had widely been expected to be South Korea's biggest this year, with major South Korean companies including Doosan, POSCO (005490.KS), Hanwha Group and GS Group having expressed interest in bidding.

Any deal was estimated to fetch around $4 billion.

A majority of Daewoo Shipbuilding was taken over by creditors in 2000 after its parent Daewoo Group collapsed with a mountain of debt.

Doosan Heavy Industries (034020.KS) was up 3.87 percent to 102,000 won and Doosan Infracore (042670.KS) was up 3.7 percent to 26,550 won as of 0141 GMT.

Daewoo Shipbuilding was down 2.22 percent to 39,600 won.