Seoul shares fall 1 pct; blue chips, banks down

* KOSPI declines on foreign, retail buying

* Falls in blue chips like Samsung Elec weigh on markets

* NHN, CJ O Shopping up after positive brokerage notes

(Updates to mid-morning)

By Jungyoun Park

SEOUL, Oct 27 (Reuters) - Seoul shares declined on Tuesday after losses overnight on Wall Street, with falls led by key blue chips such as Samsung Electronics (005930.KS) and financials such as KB Financial Group (105560.KS).

Analysts said markets are likely to move within a tight range as investors await both domestic and U.S. economic data, while eyes are also on the won KRW=.

"The macro environment is not bad at all, with South Korea's strong gross domestic product data and solid set of third quarter earnings. Investors are closely eyeing U.S. GDP data due out later this week, and this could provide some hints about the market's direction," said Song Kyung-keun, a market analyst at Dongbu Securities.

"While the U.S. dollar strengthened overnight, we do not think this will be a trend. To what extend the won and crude prices strengthen are two key uncertainties," Song added.

The Korea Composite Stock Price Index (KOSPI) was down 1.09 percent at 1,638.99 points as of 0143 GMT.

Falls were led by shipbuilding issues as the sector continues to struggle, and following market talk major Taiwanese dry-bulk shipping firm TMT may cancel ship orders amid a continued downturn.

"Both the shipping and shipbuilding sectors are in a severe downturn -- that's a known factor. But talk about TMT's troubles renewed investors' fears," said Cho In-karp, a market analyst at Shinhan Investment Corporation.

The Dry Baltic Index (BDI) .BADI, which tracks the costs of shipping key commodities, has fallen 29 percent since early June.

Shares in Daewoo Shipbuilding & Marine Engineering (042660.KS) declined 3 percent and Samsung Heavy Industries (010140.KS) retreated 2.81 percent.

Key blue chips also retreated across the board, with Samsung Electronics (005930.KS), the world's No.1 memory chip maker and the largest share on the main KOSPI index, falling 1.46 percent and POSCO (005490.KS), the second-largest share on the main index and the world's No.4 steelmaker, losing 1.46 percent.

Financials also fell following their U.S. peers' losses overnight, with Hana Financial Group (086790.KS) down 2.12 percent and Woori Finance Holdings (053000.KS) retreating 1.79 percent.