Seoul stocks turn lower on heavy foreign selling

(Updates to midday)

SEOUL, Jan 17 (Reuters) - Seoul shares turned lower by midday Thursday after a firm start, weighed by heavy foreign selling, while Daewoo Engineering & Cons (047040.KS) tumbled on news a Daewoo Eng-led group was likely to buy Korea Express (000120.KS).

The Korea Composite Stock Price Index was down 0.63 percent to 1,694.21 points by 0408 GMT, looking on course to extend its losing streak to six straight sessions. A rally in chip makers had lifted the index earlier in the session.

Foreign investors continued to dump local shares, cutting exposure to the market amid concerns about a U.S. economic recession and jittery global financial markets.

"Foreigners are selling across the board, said Kim Joong-hyun, an analyst at Goodmorning Shinhan Securities. "Unless there's a total turnaround in the U.S. markets, the KOSPI is likely to stay below 1,700."

Foreigners sold a net 433 billion won ($459 million) as of 0401 GMT, continuing a selling spree after dumping more than 1 trillion won in net value on Wednesday.

Daewoo Engineering tumbled 12.7 percent to 19,550 won following news that a Kumho Asiana Group consortium led by the builder was most likely to be named a preferred buyer for Korea Express. Investors are worried that the company would be burdened by the acquisition costs.

However, Asiana Airlines 020560.KQ jumped as much as 10.5 percent as it is expected to bear fewer costs in the deal, estimated at about $2 billion. Asiana was trading up 5.83 percent at 7,940 won.

Korea Express sagged 11.62 percent to 92,800 won. ($1=943.8 Won) (Reporting by Rhee So-eui; Editing by Keiron Henderson)