Seoul stocks rise on financials, new policy hopes

(Updates to mid-morning)

SEOUL, Feb 25 (Reuters) - Seoul stocks rose 1.5 percent on
Monday, led by lenders such as Kookmin Bank on hopes that the
sector could avoid further damage from the credit crisis, while
the inauguration of a new president lifted a range of sectors.

Builders and steelmakers rallied as the swearing in of South
Korea's president-elect on Monday boosted expectations the former
businessman would push for new, aggressive growth policies,
including his landmark pledge to build a cross-country canal.

But Samsung Electronics fell following news the battery in a
Samsung notebook computer melted, and after a source said
Samsung's LCD panel joint venture partner Sony (6758.T: Quote, Profile, Research, Stock Buzz) plans to
start buying LCD panels from Sharp (6753.T: Quote, Profile, Research, Stock Buzz), diversifying its
panel procurement channel.

The Korea Composite Stock Price Index was 1.46
percent higher at 1,711.10 points as of 0133 GMT.

"The U.S. market's recovery on news that bond insurer Ambac
could soon receive a rescue package, along with the inauguration
of South Korea's new president today, are lifting sentiment,"
said Bae Sung-young, an analyst at Hyundai Securities.

"Because investors have become quite immune to bad news
regarding subprime mortgages in the past months, markets are seen
repeating ups and downs in a boxed range provided there's no
extremely negative or positive news."

U.S. stocks rallied late on Friday on news that banks were
near an agreement to bail out bond insurer Ambac Financial, with
a source saying a rescue may be announced on Monday or Tuesday.
[ID:nN22622692]

The news sparked a rally in the beleaguered financial sector,
leading investors in Seoul to also snap up lenders.

Top lender Kookmin Bank (060000.KS: Quote, Profile, Research, Stock Buzz) rose 1.87 percent to
59,900 won, and second-ranked Shinhan Financial Group (055550.KS: Quote, Profile, Research, Stock Buzz)
added 2.71 percent to 51,200 won.

Steelmakers and builders were to the forefront with POSCO Co
Ltd (005490.KS: Quote, Profile, Research, Stock Buzz), the world's fourth-biggest steel maker, up 2.64
percent to 506,000 won and Daewoo Engineering & Construction
(047040.KS: Quote, Profile, Research, Stock Buzz) 2.1 percent ahead at 19,450 won.

But Samsung Electronics Co Ltd (005930.KS: Quote, Profile, Research, Stock Buzz) slipped 0.69
percent to 579,000 won after news that the battery in a Samsung
notebook computer melted on Sunday. [ID:nSEO44301]

(Reporting by Kim Soyoung; Editing by Keiron Henderson)