UPDATE 1-BlackRock given go-ahead for S.Korea venture

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SEOUL, July 11 (Reuters) - Money manager BlackRock Inc won approval to launch an asset management business in South Korea, the country's financial watchdog said on Friday, becoming the 17th foreign fund manager in the $335 billion market.

BlackRock (BLK.N), 49.8 percent owned by Merrill Lynch MER.N, comes just after Lazard Ltd (LAZ.N), which got the nod to open local fund management operations last month, and joins the likes of Goldman Sachs (GS.N), Credit Suisse (CSGN.VX), JPMorgan (JPM.N) and ING Groep (ING.AS)(ING.N).

Two small-sized South Korean companies also won asset management licenses, bringing the number of asset managers in the country to 58, the Financial Supervisory Service said in a statement.

South Korea's asset management industry has been growing at a double digit rate, buoyed by retail money inflows to stock funds and as pension funds and institutional investors diversify into higher-yielding investment assets.

Deregulation scheduled for February 2009 will allow fund houses to introduce and package funds based on various assets, from commodities to derivatives.

AllianceBernstein (AB.N), a New York-based money management group, and AIG (AIG.N) have also applied for fund business licenses, an official at the financial watchdog said.

AXA (AXAF.PA), Europe's second-biggest insurer, agreed to buy half of a South Korean asset manager from unlisted Kyobo Life Insurance Co for an undisclosed sum, Kyobo said last month.

The fund management sector was a money spinner last year when global stocks rallied thanks to heavy money inflows before the U.S. subprime mortgage crisis started.