S.Korea won rises on stocks, exporters; govt eyed

* Won up on stocks, exporter demand before holiday

* Traders wary of intervention by the authorities (Updates to domestic close)

SEOUL, Sept 29 - The South Korean won rose against the dollar on Tuesday, fueled by higher local stocks and as exporters chased the local currency for settlements before the Korean thanksgiving holiday later this week.

Caution, however, hightened over possible dollar-buying intervention by the foreign exchange authorities to curb the won's <KRW=> strength, prompted market players to cover short positions in the U.S. currency.

The local unit was expected to stay in a tight range as wariness was likely to offset exporter bids and data showing a sustained recovery in Asia's fourth-largest economy, analysts said.

"The bullish trend is really strong. But we need an engagement in reconnaissance around this level," said Jeong My-young, a currency strategist at Samsung Futures Inc. "Given exporter deals and the brighter economic outlook, the won is likely to rise further. But we need something more to get out of intervention caution."

With mounting wariness of currency intervention in South Korea, Japanese Finance Minister Hirohisa Fujii said intervention might be an option if exchange rates made irregular moves, his boldest comments so far in curbing speculation that he favours a strong yen <JPY=>. [ID:nT321333]

South Korean exporters including Hyundai Motor Co <005380.KS> have been enjoying price competitiveness on a weaker won while Japanese peers have been suffering under a firmer yen.

The South Korean currency was quoted at 1,185.0/7.0 per dollar as of 0600 GMT, compared with Monday's domestic close <KRW=KFTC> of 1,195.9.

Seoul shares <.KS11> ended up 0.87 percent while foreign investors sold a net 130.1 billion won worth of stocks on the main exchange.

On the economic front, the current account surplus more than halved in August from July on the back of a recovery in imports as companies bet on an economic recovery and increased investments. [ID:nSEO320944]

0600 GMT 0035 GMT Prev close Won 1,185.0/7.0 1,192.6/2.9 1,195.9 Yen/won 13.1767/18 13.2636/18 13.3931/170 KOSPI 1,690.05 1,682.89 1,675.55