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S.Korea won, N.Korea-exposed stocks slide on reports Kim Jong Un may be ill

* KOSPI falls 1%, foreigners net sellers

* S.Korea won trims losses as S.Korea refute, saying Kim is not gravely ill

* For the midday report, please click

SEOUL, April 21 (Reuters) - The South Korean won and shares of companies exposed to North Korea slid on Tuesday, as media reports that North Korean leader Kim Jong Un may be ill fueled uncertainties related to the leadership in the reclusive nation.

The Korean won closed down 0.75% at 1,229.7, having plunged to a more than two-week low midday after CNN reported Kim was gravely ill following a surgery, even as South Korea and China cast doubts on the report.

Shares of South Korean companies with heavy exposure to North Korea sank - Hyundai Elevator and Ananti fell 4.7% and 3.6%, respectively, bigger than the 1% drop in the Korea Composite Stock Price Index (KOSPI).

The currency and shares trimmed earlier losses as onshore markets closed at 0630 GMT, after two South Korean government sources rejected the CNN report without elaborating on the surgery. The presidential Blue House said there were no unusual signs coming from the reclusive state.

“Market temporarily reacted to spiking uncertainties regarding North Korea, but it’s unlikely to last long. When Kim’s late father died, stocks dropped more than 3% only to recover the next day,” said Na Jeong-hwan, an analyst at DS Investment and Securities.

Na said investors gave little attention to the 27% drop in exports for the first 20 days of April, as markets have been expecting the shipment data to worsen with the coronavirus pandemic paralyzing global manufacturing activity.

Meanwhile, defense companies surged, with Victek Co. soaring 27% and Hanwha Aerospace closing up 5.3%.

The junior KOSDAQ index declined 1.42% to 628.77 points.

Offshore investors dumped stocks, offloading a net 492.5 billion Korean won of KOSPI shares.

Market heavyweight Samsung Electronics Co declined 1.7% while chipmaker SK Hynix Inc fell 0.85%

Decliners outnumbered advancers 742 to 127.

The most liquid 3-year Korean treasury bond yield rose by 2.4 basis points to 1.036% in late afternoon trade, while the benchmark 10-year yield rose by 1.2 basis points to 1.459%. (Reporting by Cynthia Kim, Jihoon Lee; Editing by Krishna Chandra Eluri)

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