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S.Korea shares fall on concern over exports, won lower

* KOSPI hits 1-week intra-day low, inflation data shrugged off * Won falls as dollar shrugs off recent data to post gains SEOUL, Sept 2 (Reuters) - Seoul shares slid to their lowest level in a week on Tuesday morning, amid worries over sluggish growth in Europe and China and effects of that on South Korea's trade-reliant economy. The Korea Composite Stock Price Index (KOSPI) was down 0.64 percent at 2,054.66 points as of 0205 GMT. Surveys on Monday showed weaker manufacturing sectors in China and Europe. A euro zone index fell to its lowest level in over a year, signalling a red flag on global demand. South Korea already is experiencing tepid export growth. "From a valuation point of view, the market is slightly overheated and dwindling earnings per share coupled with worsening export conditions are providing little incentive for investors to push ahead," said Kang Hyun-gi, an analyst at IM Investment Securities Research Center. Market reaction was muted after data from the central bank showed South Korea's annual inflation in August eased to its lowest in five months, giving the central bank sufficient room to cut interest rates again to spur economic growth. "Although the Bank of Korea is likely to maintain its stance that leans toward easing, it's hard to see them taking any action so soon after last month's rate cut," said Park Sang Hyun, an economist at HI Investment & Securities. Samsung Engineering, which soared 12.5 percent on Monday in the wake of a $2.5 billion tie-up with Samsung Heavy Industries, fell 2.1 percent as investors took a second look at the effects of the merger. "The synergy effect between the two firms may have positive effects in the long run, but there's an immediate concern over Samsung Engineering's loss-making current projects and its implications on earnings," wrote Daishin Securities in a note to clients. Shares in SK Holdings Co Ltd rose 1.9 percent after media reports of a potential merger with tech subsidiary SK C&C. SK Holdings officials declined comment, and the Korea Exchange has requested the company to submit a regulatory filing to clarify its position on the matter by 0700 GMT. The South Korean won fell as the dollar gained ground, hitting a 7-month high against the yen, with investors looking beyond soft recent data to maintain their long-term optimism on the U.S economy. The won was trading at 1,015.3 to the dollar as of 0205 GMT, compared to Monday's session close of 1,013.1. Investors will watch for signs of further easing from the European Central Bank's Thursday policy meeting. September futures on three-year treasury bonds ticked 2 basis points higher to trade 107.03. 0205 GMT Prev close Dollar/won 2,054.66 2,067.86 Yen/won 9.6972/7048 9.7030 *KTB futures 107.03 107.01 KOSPI 1,015.3 1,013.1 * Front-month futures on three-year treasury bonds (Reporting by Joonhee Yu; Editing by Richard Borsuk)