KOSPI falls; financials spooked by Lehman forecast

(Updates to mid-morning)

By Park Jung-youn

SEOUL, June 10 (Reuters) - Seoul shares traded lower on
Tuesday despite oil's retreat from its latest peaks on Monday,
with banks weighing on the market after Lehman Brothers forecast
unprecedented quarterly losses.

Sentiment towards blue-chip financials such as Kookmin Bank
060000.KS and Shinhan Financial Group (055550.KS) soured after
Lehman Brothers LEH.N projected a worse-than-forecast quarterly
loss of about $2.77 billion, the first in its history as a public
company, and raised $6 billion in capital on Monday.

Shares in Kookmin shed 1.76 percent to 61,400 won and Shinhan
Financial Group lost 1.79 percent to 46,650 won.

The banking subindex .KS51 was down 1.23 percent.

The Korea Composite Stock Price Index lost 0.78
percent to 1,794.81 points, heading for a third consecutive
losing session. The main index is down 3.1 percent on the month.

"Investors are taking a wait-and-see stance as options and
futures expiries are due Thursday this week. Also, despite oil's
fall yesterday, prices remain ridiculously high," said So
Jang-ho, a market analyst at Samsung Securities.

"(U.S. Federal Reserve Chairman Ben) Bernanke's latest
comments about inflation point to a interest rate hike in the
U.S., which will likely strengthen the dollar further and keep
oil prices in check," So added.

Exporters such as Hyundai Motor (005380.KS) continued to face
pressure on an increasingly grim outlook for South Korea's
second-largest export market, with data Friday showing a sharp
jump in U.S. unemployment in May. Hyundai fell 1.98 percent to
79,200 won and shares in Kia Motors (000270.KS) were also down
1.28 percent to 11,600 won.

However shares in steelmakers bucked the downward trend after
POSCO Co Ltd (005490.KS), the world's fourth-largest steelmaker,
said on Tuesday it is considering raising prices on its steel
products to bring them in line with international levels.

POSCO rose 0.68 percent to 591,000 won and Hyundai Steel
(004020.KS) gained 1.82 percent to 84,000 won. Shares in Dongbu
Steel (016380.KS) and Dongkuk Steel (001230.KS) climbed 1.39
percent and 2.4 percent, respectively.

Shares in LG Electronics (066570.KS) also rose 0.37 percent
to 135,000 won after media reports on Tuesday that it will
outsource its handset manufacturing to cut costs and keep up with
rising demand.

Retailers such as Lotte Shopping Co Ltd (023530.KS) and
Shinsegae Co Ltd (004170.KS) fell a day after data showed
domestic consumer expectations dropped to their lowest level in
more than 3 years in May [ID:nSEO289730].

Lotte Shopping dropped 0.76 percent to 327,500 won and
Shinsegae fell 0.34 percent to 578,000 won.