Seoul stocks advance on Fed's cash injection

(Updates to mid-morning)

SEOUL, March 12 (Reuters) - Seoul stocks rose 2.5 percent on
Wednesday, led by financial shares, after news overnight that the
U.S. Federal Reserve and four other central banks teamed up to
inject hundreds of billions of dollar into credit markets.

"The Fed's decision to get funds for credit markets has
soothed investor sentiment since this eliminates the danger of
another lender getting short of cash," said Hwang Geum-dan, an
analyst at Samsung Securities Co.

However analysts said the market needs to see real
improvements in fundamentals for the rally to be sustained.

"Fundamentals remain grim, and questions about where the
global economy and inflation are headed still remain unanswered,"
she added.

The Korea Composite Stock Price Index was up 2.46
percent at 1,681.64 points by 0129 GMT, on course for gains for a
second day. The index at Tuesday's session low flirted with 1,600
points, its lowest since end-January and down 7.7 percent since
the end of last month.

Financial shares led Wednesday's rally, with Kookmin Bank
060000.KS, the nation's top lender, up 3.1 percent to 56,500
won, and Shinhan Financial Group (055550.KS) rising 2.66 percent
to 50,100 won.

Steel shares also rose, reversing Tuesday's losses, with
POSCO (005490.KS) advancing 2.59 percent to 495,000 won. Hyundai
Steel (004020.KS) rose 1.72 percent to 70,800 won.

"Due to the recent hike in commodities prices, we expect
POSCO to raise prices of its steel products in early April,
following its decision to raise stainless steel's price from
March 17," said Kim Hyun-tae, an analyst at Goodmorning Shinahn
Securities.

In the awake of another record high for oil prices,
transportation shares lagged the wider market, with Korean Air
Line (003490.KS) advancing just 0.62 percent to 64,900 won and
Asiana Air 020560.KQ up only 0.59 percent to 6,830 won.

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