Seoul shares dip on oil, U.S. economy worries

(Updates to mid-morning)

SEOUL, May 19 (Reuters) - Seoul shares traded lower
on Monday after a rally last week that lifted the main index to a
new 2008 peak, with record oil prices and Wall Street's flat
finish on Friday containing their momentum.

But shipbuilders rose across the board on expectations
the sector will perform solidly in 2008, with companies reporting
a batch of stronger-than-expected first quarter profits and the
weak won currency KRW= boosting the price competitiveness of
South Korea-made ships.

"The talk around the market is there will be quite a number
of new orders for ships and marine plants around June," said Sung
Ki-jong, an analyst at Daewoo Securities.

"I'm hearing about huge orders from Brazil and other oil
producing countries. Also, ship prices remain strong enough to
offset the rising cost of steel plates," Sung added.

Hyundai Heavy Industries (009540.KS) rose 3.81 percent to
381,000 won, and Daewoo Shipbuilding & Marine Engineering
(042660.KS) gained 3.83 percent to 44,700 won after a top
shareholder in the company said on Sunday it had withdrawn from
talks to have Goldman Sachs (GS.N) manage the sale of the
shipbuilder.[ID:nSEO354359]

Samsung Heavy Industries Co Ltd (010140.KS) also rose 3.01
percent to 42,800 won after news on Friday that UK gas producer
BG Group plc (BG.L) had signed an agreement to buy two liquified
natural gas carriers from the shipbuilder for an undisclosed
sum.[ID:nSEO347496]

The Korea Composite Stock Price Index fell 0.35 percent to
1,882.35 points as of 0140 GMT after briefly rising above 1,900
for the first time since December 28 last year.

"The index is being tested around 1,900, and in order for it
to rise above that level we need techs and carmakers to extend
their rallies too, but macroeconomic factors aren't strong enough
to lift them further yet," said Lee Sun-yeob, a market analyst at
Goodmorning Shinhan Securities.

Stabilisation of inflation pressures, particularly oil
prices, and new signals pointing to a recovery in U.S.
consumption may help South Korean shares further their gains,
analysts said.

REFINERS RISE

Shares in oil refiners also rebounded on expectations that
ongoing investments in upgrading facilities would improve their
margins.

GS Caltex, a unit of GS Holdings (078930.KS) jumped 6.31
percent to 42,150 won after it announced after Friday's closing
bell that it would invest 2.94 trillion won in a hydrocracker,
which refines heavy fuel oil into more expensive lighter
products.[ID:nSEO335779]

But major technology shares such as Samsung Electronics
(005930.KS) and LG Electronics (066570.KS) gave up some of the
gains that recently lifted them to historical highs, with Samsung
down 1.71 percent to 747,000 won and LG Elec down 4.1 percent to
152,000 won.

Exporters such as Hyundai Motor (005380.KS) also retreated
after data showing U.S. consumer confidence tumbled to a 28-year
low in May as rising prices strained household
finances.[ID:nN16406494]

Hyundai Motor fell 0.79 percent to 88,300 won and Kia Motors
(000270.KS) dropped 5.3 percent to 13,400 won.

(Reporting by Park Jung-youn; Editing by Jonathan Hopfner)