Seoul shares rise; builders, LS Industrial rally

* KOSPI gains 0.64 pet

* Builders surge following river revamp plans

* LS Industrial up after JV plan with German chipmaker

SEOUL, June 9 - Seoul shares rose on Tuesday, with construction issues rallying on the government's $18 billion plan to revamp major rivers, while LS Industrial surged after news of a joint venture plan with a German chipmaker.

The Korea Composite Stock Price Index (KOSPI) was up 0.64 percent at 1,402.26 points as of 0156 GMT.

"Growing economic hopes and domestic issues, such as government plans to revamp major rivers, are sending shares higher. Foreign investors are continuing to buy, which is a positive signal," said Suh Dong-pil, a market analyst at Hana Daetoo Securities.

"Ahead of futures and options expiries later this week, we are seeing robust futures buying activity, as the basis level in futures markets is good," Suh added.

Construction shares led gains after the government said it had finalised a plan to spend a combined 22.2 trillion won ($17.79 billion) until 2012 to develop four of the country's major rivers.

"Large construction companies are expected to form a consortium, and will probably evenly win construction orders from the river project," said Dongbu Securities analyst Hong Seo-yeon, in a report on Tuesday, naming Hyundai Engineering & Construction and Kyeryong Construction among the chief potential beneficiaries of the initiative.

Hyundai E&C wwa up 2.59 percent, while Kyeryong Construction jumped 12.53 percent.

LS Industrial System Co jumped 4.89 percent after a South Korean electrical power equipment supplier on Tuesday said it would set up a 40 billion won ($32.06 million) semiconductor joint venture with German chipmaker Infineon Technologies AG in August.

In a filing with the Korea Exchange, LS Industrial said it would invest 21.6 billion won in the venture, which would produce power semiconductors.

Banks rose following their latest losses. KB Financial Group advanced 1.12 percent and Hana Financial Group rose 2.64 percent.

Growing earnings hopes and strengthening views that the flat panel industry is headed for a turnaround, sent some technology issues higher.

Samsung Electronics gained 1.04 percent and LG Electronics was up 0.86 percent.