* KOSPI treads water as dip in exports place investors on guard * Won eases against the dollar as month-end demand dissipates By Joonhee Yu SEOUL, Sept 1 (Reuters) - South Korean shares were sluggish in morning trade, with investors keeping to the sidelines after data showed another month of tepid exports growth for the trade-reliant economy. The Korea Composite Stock Price Index (KOSPI) was down 0.02 percent at 2,068.08 points as of 0220 GMT. Exports by trade powerhouse South Korea fell slightly in August, official data showed on Monday, missing market expectations and underscoring the still-fragile economic recovery as global demand remains weak. "Although the slight drop in exports can be partially attributed to fewer working days, we are definitely seeing some slack in the pace of recovery compared to the second quarter," said Park Hee-chan, an analyst at Mirae Asset Securities. Fading expectations that the European Central Bank would take immediate stimulus measures during this week's policy meeting also dampened the mood. "The ECB may still be leaning towards further easing, but we don't expect to see any significant action until we approach the end of the year rather than now" said Yoon Young-kyo, an analyst at IBK Investment & Securities. The KOSPI drifted 0.37 percent lower in August to snap a three-month winning streak on lingering worries over the global economic outlook. Telecom stocks, a traditional defensive play resilient to economic cycles, rallied in an otherwise quiet market with SK Telecom, South Korea's largest mobile service provider, gaining 2.4 percent. Shares in Samsung Engineering jumped 8 percent while Samsung Heavy Industries soared 5.7 percent after the two Samsung Group affiliates announced a merger worth 2.5 trillion won ($2.47 billion). The South Korean won ticked slightly lower against the dollar on Monday on a broadly firmer U.S. dollar thanks to positive U.S economic data. The local currency was quoted at 1,014.5 to the dollar as of 0220 GMT. September futures on three-year treasury bonds was unchanged at 107.02. 0220 GMT Prev close Dollar/won 1,014.5 1,014.0 Yen/won 9.7361/399 9.7420 *KTB futures 107.02 107.02 KOSPI 2,068.08 2,068.54 * Front-month futures on three-year treasury bonds (Reporting By Joonhee Yu; Editing by Shri Navaratnam)