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Seoul shares reverse, down 1.2 pct to 18-mth low

Reuters - Tuesday, September 2

SEOUL, Sept 2 - South Korean shares gave up session gains to fall 1.2 percent in midafternoon trading on Tuesday, dragged down by banking shares and the slide in the won.

By 0509 GMT the main KOSPI index <.KS11> was down 1.45 percent to 1,393.98 points, its lowest since 1,382.70 points on March 6, 2007 and down 33.6 percent from its record high of 2,085 points in November last year.

Seoul shares had opened 0.3 percent higher and touched a session peak of 1,430.43 points.

Traders said news that state-owned Korea Development Bank was in talks over a possible consortium investment in troubled U.S. bank Lehman <LEH.N> had rocked South Korean financial shares.

Investors are concerned that buying into a top U.S. bank could further expose South Korea's financial services firms to the problems hitting top global investment houses, which have been battered by heavy mortgage writedowns and seen their share prices tumble.

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