UPDATE 1-Hyundai Steel, ThyssenKrupp sign technology deal

(Adds details, background)

SEOUL, Dec 6 (Reuters) - Hyundai Steel (004020.KS), South Korea's second-biggest steel maker, said on Thursday it had signed a technology agreement with Germany's ThyssenKrupp (TKAG.DE).

Under the deal, ThyssenKrupp will provide Hyundai Steel, a unit of Hyundai Motor Group (005380.KS), with a range of steel-making technologies from blast furnaces to hot-rolled steel products, the company said in a statement.

Hyundai Steel and Hyundai Motor Group also agreed in principle to cooperate in buying more steel products from ThyssenKrupp for its U.S. and European auto plants.

Last year, Hyundai Steel unveiled a plan to build a 5.24 trillion won ($5.68 billion) steel mill in South Korea, which will have a capacity of up to 8 million tonnes a year when completed in 2011.

The plant is under construction in the port city of Dangjin, about 100 km (62 miles) southwest of Seoul. Hyundai Motor Group has been hoping to strengthen its steel business by using traditional blast-furnace technology, as part of efforts to ensure stable, cheap steel supplies for its auto production.

POSCO (005490.KS), the world's fourth-largest steel maker with crude steel output of 30.5 million tonnes annually, is currently the only South Korean company operating blast furnaces and dominates the domestic hot-rolled steel market.

Blast furnaces create high-end products from iron ore, while electric furnaces manufacture lower-end steel by melting scrap.

Hyundai Steel produces steel coil, beams and hot-rolled steel products using electric furnaces. Shares in Hyundai Steel gained 2.03 percent to trade at 85,600 won by 0255 GMT, outperforming a 1.1 percent rise in the broader market. (Reporting by Kang Shinhye; By Keiron Henderson)