UPDATE 1-KDB ends talks with Goldman over Daewoo sale

(Adds KDB statement)

SEOUL, May 18 (Reuters) - A top shareholder in Daewoo Shipbuilding and Marine Engineering Co Ltd (042660.KS: Quote, Profile, Research, Stock Buzz) said on Sunday it had withdrawn from talks to have Goldman Sachs (GS.N: Quote, Profile, Research, Stock Buzz) manage the sale of the South Korean shipbuilder.

State-run Korea Development Bank (KDB) and other banks want to sell their 50.4 percent stake in the world's third-largest shipbuilder and KDB picked the Wall Street bank in April to handle the deal.

KDB said it had cancelled that decision to pick Goldman Sachs as a preferred negotiator, adding that a new adviser would be chosen soon.

"KDB withdrew the appointment of Goldman Sachs as a preferred adviser as we could not reach an agreement on a contract for an adviser of the sale," the bank said in a statement.

The sale is expected to be the country's biggest M&A transaction this year, fetching more than $4 billion, based on the stake's market value of 4.15 trillion won ($4 billion).

Earlier, a KDB spokesman said the talks had failed because Goldman Sachs did not meet certain KDB demands.

"We had been in talks with Goldman, a preferred negotiator, to manage the deal," a KDB spokesman said by telephone. "But Goldman said it could not accept our requests, so the talks ended."

He declined to give any details on those requests. Goldman Sachs declined to comment.