Seoul shares lower; carmakers fall, refiners up

(Updates to mid-morning)

By Park Jung-youn

SEOUL, April 15 (Reuters) - Seoul shares traded slightly
lower on Tuesday morning after opening in positive territory,
with losses in carmakers on rising energy and raw material prices
outweighing gains by energy firms.

Carmakers such as Hyundai Motor (005380.KS: Quote, Profile, Research, Stock Buzz) fell 1.95 percent
to 80,400 won, after steep gains in recent weeks, on concerns
rising raw material prices may dent profitability.

"Shares have gained significantly recently and lack strong
fundamentals to sustain the rally," said Yong Dae-in, an analyst
at Hanwha Securities.

By 0130 GMT the Korea Composite Stock Price Index was down
0.16 percent to 1,743.86, back from an earlier session peak of
1,754.30 points, dragged by a weaker Wall Street close where
banks fell after an unexpected quarterly loss from Wachovia.

"Earnings from the Wall Street including Monday's Wachovia
have been disappointing and the latest U.S. economic data point
to a U.S. recession," said R.S. Rhoo, a market analyst at Hyundai
Securities.

"Although South Korean firms' earnings have come out solid so
far, they have already been factored in during recent rally.
Investors have turned more cautious," he added.

Wachovia, the No.4 U.S. bank posted a first-quarter loss on
Monday as credit problems from mortgages and other debt soared,
prompting it to raise $7 billion of capital, cut its dividend and
shed employees [ID:nN14343221].

South Korean banks held firm after recent gains fuelled by
privatisation and deregulation hopes, with Kookmin Bank
(060000.KS: Quote, Profile, Research, Stock Buzz) up 2.3 percent at 66,300 won and Woori Financial 1.6
percent higher at 19,650 won.

"Investors have learned by now that local banks do not have
extensive direct exposure to the U.S. credit markets, and banks'
issues on Wall Street are seen as 'their problems'," said Daniel
Baek, an analyst at Woori Investment.
"Expectations for privatisation of state banks and ownership
deregulations are high, as they will likely fan mergers and
acquisitions interest," he added.

HYUNDAI PAUSE

Hyundai Motor shares were pausing after gaining more than 23
percent since mid-March, while increasing materials costs were
becoming a worry.

"There are cost concerns as price of auto steel is set to
rise further in line with recent steel price hikes," Yong said,
adding that the record high oil price is also dampening appetite
towards the shares on worries about consumer sentiment.

However oil refining shares such as SK Energy (096770.KS: Quote, Profile, Research, Stock Buzz) and
GS Holdings (078930.KS: Quote, Profile, Research, Stock Buzz) rose on the back of improving refining
margins and tighter inventory levels.

"Refining margins have been on a recovery track since March,
with margins for kerosene and gasoline rising quite rapidly
thanks to tighter supply," said Park Dae-yong, an analyst at
Hyundai Securities in a note.

SK Energy rose 2.65 percent to 116,000 won and GS Holdings, a
holding company of South Korea's second-largest oil refiner GS
Caltex, gained 0.36 percent to 42,300 won.

LG Electronics (066570.KS: Quote, Profile, Research, Stock Buzz) gained 1.1 percent to 138,000 won
on expectations first-quarter profits due on Wednesday be strong
due to stellar margins at its mobile phone unit and robust
earnings at its LCD joint venture.

LG said on Tuesday its display division likely swung to small
profit in the first quarter, thanks to growing plasma TV sales
and narrowing losses from plasma display panels [nSEO254525],
confirming a senior official's remarks to a local newspaper.

Transportation shares such as Korean Air Line (003490.KS: Quote, Profile, Research, Stock Buzz) and
Asiana Airlines (020560.KS: Quote, Profile, Research, Stock Buzz) also fell after U.S. crude futures
CLc1 settled $1.62 higher at $111.76 a barrel on Monday,
hitting a new historical high.[ID:nL14565533]

Korean Air fell 1.74 percent to 50,700 won, and Asiana lost
0.63 percent to 6,350 won.

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