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UPDATE 2-Nokia re-enters key S.Korean market, shares up

* Had planned to return some time in 2009

* S.Korea, U.S. key areas for Nokia to gain market share

* Move enabled by Korea’s technology shift to WCDMA

(Adds analyst, share, background)

By Tarmo Virki and Marie-France Han

HELSINKI/SEOUL, April 6 (Reuters) - The world's top handset maker, Nokia NOK1V.HE, re-entered the cellphone market in South Korea, a heartland of two of its main rivals and one of the key countries it targeted for market share gains in 2009.

The country's second largest mobile carrier, KTF 032390.KS, said on Monday it started to sell Nokia's higher mid-range 6210 model, boosting the Finnish firm's share price.

Nokia, which previously said it would re-enter South Korea some time in 2009, had set the country -- one of the few in the world where it is not the No.1 player -- as one of two for market share gains in 2009. The other was the United States.

Last year, 23.6 million phones were sold in South Korea, according to Gartner -- around 2 percent of the global market -- but its importance is proportionally higher as South Koreans buy feature-rich handsets that sell at prices well above the global average.

Nokia has not sold phones in South Korea -- the home market of its closest rivals Samsung Electronics 005930.KS and LG Electronics 066570.KS -- for years as the market was focused heavily on CDMA technology, where Nokia has been a smaller player.

Over the last two years the majority of Koreans have switched over to faster third-generation (WCDMA) networks and phones, a stronghold for Nokia.

Nokia said it would host a news conference in the country on Tuesday.

“This is the technology dynamic that has enabled Nokia to re-enter the market. Nokia can leverage its global scale to drive down 3G handset costs and offer competitively priced models,” said analyst Neil Mawston from Strategy Analytics.

South Korea’s cellphone market is dominated by powerful local firms, with foreign firms struggling to win share.

“We expect Nokia to remain a niche player in South Korea for the foreseeable future, but its re-entry does represent an opportunity ... to take the fight back to rival Samsung’s home turf,” Mawston said.

Nokia’s global market share has slipped in the last few quarters and it controlled 37.7 percent of the market in the fourth quarter of 2008. At the same time Samsung has won a larger share and, according to Gartner, had 18.3 percent of the market.

“With Samsung growing in strength, Nokia has clearly identified the need to improve competitiveness in markets where it has struggled historically,” said CCS Insight analyst Geoff Blaber.

“These markets could prove to be key sources of growth in a year when Nokia will experience challenging conditions across other markets,” Blaber said.

The cellphone market is expected to see its toughest year ever in 2009, with sales volumes falling 10 percent or more as consumers cut spending on new gadgets.

Shares in Nokia were up 4.1 percent higher at 9.96 euros by 1036 GMT, outperforming a firmer DJ Stoxx European technology index .SX8P that rose 3.4 percent.

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