Seoul shares fall as Samsung, LG Elec decline

(Updates to mid-morning)

SEOUL, May 26 (Reuters) - Seoul shares traded lower
on Monday, heading for a sixth straight losing session, led by
techs such as LG Electronics (066570.KS), on market talk that
Nokia may cut its handset prices and re-enter the Korean market.

Shares in LG Electronics fell 7.53 percent to 135,000 won.

"Rumours have been circulating that Nokia will cut its prices
on handsets by as much as 20 percent, in an attempt to steal more
market share from laggards like Motorola," said Kim Ik-sang, an
analyst at CJ Investment & Securities.

Shares in world No.2 handset maker Samsung Electronics
(005930.KS) lost 4.1 percent to 678,000 won, underperforming a
1.8 percent fall in the wider market.

The Korea Composite Stock Price Index was down 30.5 points to
1,797.63 points as of 0219 GMT, down some 4.7 percent since its
current losing run started on May 19.

"Oil's recent peak is a real drag on market sentiment, and
unless we see some stabilisation in this front, the index could
fall to 1,780," said Bae Sung-young, an analyst at Hyundai
Securities. At last Monday's intra-day high of 1,901 points the
KOSPI had rallied 24 percent from the mid-March low of 1,537.

Analysts said the drop in LG Electronics probably also
reflected investors cashing in on a 46 percent jump in the shares
since the beginning of the year to last Friday's closing, fuelled
by buoyant recent earnings and a strong outlook.

"I think the market is overeacting here, since handset models
that Nokia and LG Elec carry are of different types," said Greg
Roh, an analyst at Korea Investment & Securities.

"Also, handsets undergoing price cuts are expected be those
few unpopular models. Cuts are not happening universally on
Nokia's lines," Roh added.

Airlines such as Korean Air Line (003490.KS) fell as oil
stayed within range of the recent high $135 a barrel, tracking
their peers on Wall Street after the American Stock Exchange
index of airline shares .XAL fell another 4.2 percent on Friday
making a 20 percent decline on the week.[ID:nN23337857]

Korean Air Line lost 4.26 percent to 46,050 won and Asiana
Airlines (020560.KS) dropped 4.23 percent to 5,430 won.

However some brokerages posted gains on hopes for merger and
acquisition activity in the sector, after South Korea's Kyobo
Securities (030610.KS) confirmed on Friday after the closing bell
that its top shareholder, unlisted Kyobo Life, was considering
selling its stake in the brokerage after mid-June.[ID:nSEO185053]

Kyobo Securities rose the daily limit of 15 percent for a
second straight session, quoted at 20,400 won. SK Securities
climbed 2.3 percent to 2,895 won.

(Reporting by Park Jung-youn; Editing by Keiron Henderson)