Seoul shares fall; Kookmin, SK Tel lead losses

(Updates to mid-morning)

By Park Jung-youn

SEOUL, July 16 (Reuters) - Seoul shares traded slightly lower
on Wednesday after the previous session's 3 percent drop, with
Kookmin Bank leading a financial sector downturn after plummeting
on worries about a possible delay in its holding company plans.

Shares in Kookmin Bank 060000.KS tumbled after South
Korea's top commercial lender said on Wednesday that it would not
go ahead with its planned launch of a holding company if the
number of shares to be bought back from shareholders exceeded 15
percent of outstanding shares.

Kookmin had perviously set the put-back option price at
63,293 won. Kookmin shares were down 7.3 percent to 53,300 won as
of 0135 GMT.

"Worries about a possible delay in the holding company plans,
and the costs of launching the plans, are weighing on sentiment,"
said Shim Kyu-sun, an analyst at SK Securities.

The Korea Composite Stock Price Index was down 0.14
percent to 1,507.21 points.

"Despite the market's latest big losses, investors are still
holding back as they remain skittish about the poor economic
backdrop and negative news about U.S. credit market conditions,"
said Lee Jae-man, a market analyst at Tong Yang Investment Bank.

"Investors want to confirm important economic data -- such as
U.S. and China consumer price data -- and U.S. bank earnings
results before making any moves," Lee added.

Shares in SK Telecom (017670.KS) also fell after a CNBC
report that it was negotiating to buy Sprint Nextel Corp (S.N),
the No.3 U.S. mobile service.

However sources familiar with the matter told Reuters SK
Telecom and Sprint were in preliminary talks about collaborating
on technology and said there were no acquisition talks.

SK Telecom shares were down 3.22 percent to 180,500 won.

Shares in airlines such as Korean Air Line (003490.KS) and
Asiana Airlines (020560.KS) advanced after oil dropped more than
$6 on Tuesday to settle at around $139 a barrel.

Korean Air Line rose 2.89 percent to 41,000 won and Asiana
Airlines rose 3.52 percent to 4,705 won.

Meanwhile shares in Hyundai Motor (005380.KS) shed 1.04
percent to 66,700 won after South Korea's top automaker said on
Tuesday it would raise car prices by about 2 percent to cope with
rising prices of steel and other raw materials.[ID:nSP297862]

The price increases come as unionised workers at Hyundai
decided to launch partial strikes on Wednesday and Friday over a
wage deal.