* N.Korea reports briefly shake markets
* LG Elec falls despite solid Q4 results, cautious outook
(Updates to close)
By Jungyoun Park
SEOUL, Jan 27 (Reuters) - Seoul shares posted their lowest close in seven weeks on Wednesday, with sentiment pressured by reports North and South Korea had exchanged artillery fire, and LG Elec (066570.KS) falling despite solid quarterly global profit figures.
Investors were briefly disturbed by news that South Korea had returned fire after North Korea shot several artillery rounds into waters near a disputed sea border with the South, but markets quickly trimmed earlier losses.[ID:nTOE60Q01B]
"Market sentiment was momentarily shaken by the North Korea reports, as they came when shares was already pressured with continuing worries about China's monetary tightening moves and signals of U.S. curbs on banks," said Hwang Chang-joong, head of investment strategy at Woori Investment & Securities.
"But the North Korea factor is, as usual, a short-term negative. Today's events were relatively benign compared to say, a missile launch," said Hwang added.
The Korea Composite Stock Price Index (KOSPI) finished down 0.72 percent to 1,625.48 points, the lowest close since December 4, 2009 and below its 120-day moving average near 1,630 points.
Shares in LG Electronics (066570.KS) fell 1.85 percent to 106,000 won despite posting the firm posting a higher-than-expected quarterly operating profit as strong flat-screen TV sales offset sluggish earnings from mobile phones.[ID:nSEF000047]
"The figures came out better than the market consensus but mainly due to its TV business rather than its handset unit," said Yoo Jong-woo, an analyst at Korea Investment & Securities.
"Worries about its phone business, particularly its smartphone business, persist, and I do not see that changing unless LG Electronics unrolls a more attractive smartphone lineup," Yoo added.
Other technology exporters also declined as market sentiment continued to weaken.
Samsung Electronics (005930.KS), the world's No. 1 memory chip maker, fell 1.84 percent, and Hynix Semiconductor (000660.KS), the world's No. 2, declined 1.48 percent.
Shares in KB Financial Group (105560.KS) (KB.N) fell to a six -month low on concerns that the government might be exerting a greater influence over its day-to-day management.
The worries were sparked after the Chosun Ilbo newspaper reported on Wednesday that more than four non-executive board members at KB Financial, the parent firm of top domestic bank Kookmin, were expected to step down, citing an unnamed KB senior official.
The report came after South Korea announced a plan on Monday to tighten rules on non-executive boards of banks. [ID:nTOE60O02K]
KB Financial spokesman Kim Tae-hyun said it had not been informed of the board members' resignations.
An analyst at a domestic brokerage said the report fuelled speculation that the government could step up intervention in the banking group, which could be seen as a risk to investors.
Shares in KB lost 4.15 percent to 49,650 won, the lowest close since mid-July, 2009.
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