Seoul shares tumble on record oil, U.S. selloff

(Updates to mid-morning)

By Park Jung-youn

SEOUL, June 27 (Reuters) - Seoul shares traded lower on
Friday led by exporters after record oil prices and rekindled
worries about the global credit crunch sent Wall Street shares
sharply lower overnight.

Carmakers and financials such as Hyundai Motor (005380.KS) and
Kookmin Bank 060000.KS tumbled after a major U.S. investment
bank urged investors to sell bank and automaker shares, causing
their Wall Street peers to tumble overnight.

Hyundai Motor fell 3.92 percent to 73,600 won and Kia Motors
dropped 2.97 percent to 11,450 won. South Korea's bluechip
banking issues including Kookmin Bank and Shinhan Financial Group
(055550.KS) were down 1.75 percent and 2.97 percent each.

The Korea Composite Stock Price Index was down
2.1 percent to 1,682.35 points as of 0138 GMT, the lowest since
late March, and also down 11.4 percent from the mid-May high of
1,901.

"Every negative market factor possibly thinkable is in the
picture, and with the U.S. selloff thrown in on top of that,
panic-selling has been triggered," said Oh Hyun-seok, a market
analyst at Samsung Securities.

"And the market currently has little internal strength to
offset bad external factors," Oh said, adding that the index
however looked likely to hold firm at around 1,650.

"Unless systemic risks about Asian markets emerge, as in a
full-fledged financial crisis in Vietnam or Thailand, (in that
case) the market would steady at the 1,600-level."

Analysts also cautioned against bargain hunting as the market
is more or less on a downward trend until some stabilisation in
oil prices at "resonable levels" are seen, as corporate profits
from the second half are seen under pressure.

"Investors are hoping for some monetary policy agreements
among G8 nations at the upcoming July meeting, to help prop up
the U.S. dollar," said Lee Sun-yeob, a market analyst at
Goodmorning Shinhan Securities.

"Meanwhile hopes for a rebound during second quarter earnings
will be unanswered as third quarter numbers are set to be weak,"
Lee said, adding that "less steep falls or a weak rebound" are
likely during July earnings season, with substantial rises
unlikely unless tangible improvements in the macroeconomic
backdrop emerge.

LG SLIDE

LG Electronics (066570.KS) stood out with a 3.23 percent
slide to 120,000 won after Lehman Brothers cut its price target
on the No.4 handset maker citing a "more cautious view" on the
handset business and profitability in other business divisions.

"We lower LG Elec's second quarter global operating profit
estimate by 5.5 percent to 821 billion won as we expect the
handset business to miss its shipment guidance of 30 million
units by 2.3 million units and other business to experience
slightly weaker margins," Lehman said in its report on Friday.

Technology bellwhethers such as Samsung Electronics
(005930.KS) and Hynix Semiconductor (000660.KS) likewise fell
across the board on an increasingly grim outlook for the sector
amid rapidly cooling consumer sentiment.

Samsung Elec shed 2.86 percent to 646,000 won and Hynix went
down 3.31 percent to 26,300 won.

Meanwhile gains in oil prices to a new record above $140 a
barrel also put airlines such as Korean Air Line (003490.KS) and
Asiana Airlines (020560.KS) under pressure. Korean Air lost 3.95
percent to 51,100 won and Asiana Airlines dropped 2.61 percent to
5,590 won.