Seoul markets seen lifted by $130 bln package

SEOUL, Oct 20 (Reuters) - Seoul financial markets look set to receive a broad-based lift on Monday from a set of measures worth over $130 billion unveiled by the country's top authorities on Sunday to shore up confidence in the local banking system.

Banking shares and the won KRW= will likely benefit most from the measures, centering on a government guarantee for local banks' foreign debt and a sharp increase in cash injections into money markets both in dollars and won, analysts and traders said.

"The decisive move of the government will likely dispel lingering concerns of investors about the usability of the foreign reserves, relieve much of the pressure in the currency markets, and help support bank stock prices, which dropped the most in the region last week," Goldman Sachs said in a research note.

South Korea on Sunday joined international rescue efforts, offering a state guarantee on foreign debt and promising to recapitalise financial firms if necessary. [ID:nSEO366228]

The Korea Composite Stock Price Index ended down 2.73 percent to 1,180.67 points on Friday, its lowest close since late October 2005. It has dropped fallen over 20 percent this month.

The won has fallen 11 percent against the dollar so far this month, bringing its loss since the beginning of the year at 30 percent, on lingering doubts about the country's ability to secure sufficient dollars to serve its foreign debt.

"The won will gain today, although the scope could still depend on how other markets perform," said Park Yong-il, an FX trader at DBS Bank's local branch.

In the bond market, analysts said the measures would provide some support to corporate and bank bonds, although the bond market's overall direction would still depend more on how Wall Street markets fare in the future.

On the diplomatic front, South Korea said on Sunday no significant moves had been detected in North Korea after Japan's Yomiuri Shimbun newspaper reported a day earlier that North Korean diplomats had been told to stay close to their embassies and await an important message. [ID:nSEO305974] ----------------------MARKET SNAPSHOT @ 2223 GMT ------------

INSTRUMENT LAST PCT CHG NET CHG S&P 500 .SPX 940.55 -0.62% -5.880 USD/JPY JPY= 101.47 -0.16% -0.160 10-YR US TSY YLD US10YT=RR 3.9356 -- 0.000 SPOT GOLD XAU= 783 0.19% 1.500 US CRUDE CLc1 71.84 -0.01% -0.010 DOW JONES .DJI 8852.22 -1.41% -127.04 ASIA ADRS .BKAS 95.80 -1.49% -1.45 -------------------------------------------------------------

MARKETS SUMMARY *Wall Street slips as recession worries nag [ID:nN17469304] *Oil rises $2 on OPEC, global markets [ID:nN17332676] *Dollar, yen rise as global risk appetite falters [ID:nN17596625] *Treasuries mostly up, rates rise on credit thaw [ID:nN17480743]

STOCKS TO WATCH

BANKING STOCKS

South Korea's top three economic planners told a joint news conference on Sunday that they would inject $30 billion to banks and exporters, on top of payment guarantees worth $100 billion. LG ELECTRONICS (066570.KS)

The maker of flat screens and handsets is set to report third-quarter results at 0500 GMT.

(Reporting by Kim Yeon-hee, Seo Eun-kyung and Yoo Choonsik; Editing by Keiron Henderson)