Seoul stocks fall to 10-month low on credit worries

(Updates to mid-morning)

SEOUL, March 17 (Reuters) - Seoul stocks fell more than 2
percent to a ten-month low on Monday, led by financials, as news
that JPMorgan Chase & Co (JPM.N: Quote, Profile, Research, Stock Buzz) would buy troubled rival Bear
Stearns BSC.N revived investor's fears about a widespread
credit market crisis.

"The crisis is widening and investors are asking themselves
which financial firm will be the next to come clean of their cash
problems," said Lee Kyoung-su, an analyst at Daewoo Securities.

Meanwhile, in a surprise move, the U.S. Federal Reserve cut
the discount rate it charges on direct loans to banks to 3.25
percent, effective immediately [ID:N16500718].

"The U.S. Fed's discount rate cut comes mainly to facilitate
JP Morgan's purchase of Bear Stearns. There is utter lack of
trust in the market and in the Fed," said Kim Kyoung-joong, an
analyst at Goodmorning Shinhan Securities.

The Korea Composite Stock Price Index was down 2.72 percent
to 1,556.33 as of 0144 GMT, its lowest intraday level since early
May 2007.

Further weakening in the local currency also darkened the
mood. The South Korean won extended its losses against the
dollar, falling more than 2 percent on Monday.

Koookmin Bank (060000.KS: Quote, Profile, Research, Stock Buzz) lost 4.64 percent to 53,400 won and
Hana Financial Group (086790.KS: Quote, Profile, Research, Stock Buzz) dropped 6.57 percent to 37,700
won.

Kookmin Bank had earlier in the day announced that it was
buying a 30 percent stake in a mid-sized Kazakh bank CenterCredit
CCBN.KZ for $623 million.

Brokerages also fell across the board, with Woori Investment
& Securities (005940.KS: Quote, Profile, Research, Stock Buzz) declining 2.76 percent to 19,400 won,
and Daewoo Securities (006800.KS: Quote, Profile, Research, Stock Buzz) losing 5.76 percent to 20,450
won.

Companies that are sensitive to material prices such as
POSCO (005490.KS: Quote, Profile, Research, Stock Buzz) declined, shedding 4.3 percent to 423,000 won.
Hyundai Steel (004020.KS: Quote, Profile, Research, Stock Buzz) fell 4.95 percent to 63,300 won.

Retailers also fell on worries that rising commodities prices
will dampen the consumer appetite. Shinsegae Co Ltd (004170.KS: Quote, Profile, Research, Stock Buzz)
dropped 4.51 percent to 551,000 won.

(Reporting by Park Jung-you and Park Ju-minn; Editing by
Marie-France Han )