* KOSPI inch down on backlash of window-dressing * Upbeat China mfg PMI survey help pare losses * Won moves sideways, wary of intervention SEOUL, July 1 (Reuters) - South Korean shares edged lower on Tuesday morning, weighed down by a selloff by domestic institutional investors and the country's weaker-than-expected exports data, but upbeat China factory activity surveys helped trim much of earlier losses. The Korea Composite Stock Price Index (KOSPI) was down 0.3 percent at 1,997.01 points as of 0205 GMT, after touching an intraday low of 1,987.89. "Institutional investors have been window-dressing in late-June, and appear to be booking gains from their increased holdings of large-caps at the start of the second half," said Lee A-ram, an analyst at NH Investment & Securities. Domestic institutional investors sold a net 43 billion won ($42.52 million) worth of KOSPI shares near mid-session, after bringing in 823 billion won worth during their 8-day buying spree through Monday. Hana Daetoo Securities analyst Chang Hee-jong pointed the country's exports data coming in below market consensus had soured sentiment. He expected investors to tread cautiously before Samsung Electronics' April-June quarter earnings guidance was issued on Friday. Market bellwether Samsung Electronics Co Ltd fell 0.8 percent while autoparts maker Hyundai Mobis Co Ltd dropped 2.8 percent. Government data out on Tuesday showed South Korea's exports grew an annual 2.5 percent in June, below the median forecast of a 5.5 percent gain tipped in a Reuters survey of analysts, with exports to China slipping for a second straight month. However, both private and government surveys for China's factory activity expanded in June in line with expectations, adding to signs that South Korea's largest export market is regaining strength. Defensive names were in positive territory, with mobile carrier SK Telecom Co Ltd and state-run utility company Korea Electric Power Corp gaining 1.7 percent and 0.7 percent, respectively. In the foreign exchange market, the won was little changed against the dollar on caution over intervention by the local authorities after hitting a near six-year high in the previous session. South Korean foreign exchange authorities were suspected of curbing the pace of the won's appreciation through dollar purchases on Monday, when the won hit 1,010.8 per dollar - which its strongest level since July 31, 2008. The local currency was quoted at 1,011.5 versus the dollar as of 0205 GMT, compared with Monday's onshore close at 1,011.8. 0205 GMT Prev close Dollar/won 1,011.5 1,011.8 Yen/won 9.9695/606 9.9803 *KTB futures 106.47 106.43 KOSPI 1,997.01 2,002.21 * Front-month futures on three-year treasury bonds ($1 = 1011.3000 South Korean Won) (Reporting by Jungmin Jang; Editing by Eric Meijer)