DEALTALK-State assets could be a tough sell for S.Korea

* Block sale of Woori Finance stake expected this year

* Two power utilities set for Dec IPOs after delays

* Reduced market liquidity, econ concerns may cool demand

* Lack of management rights may put off foreign interest

* Govt hopes to raise $4 bln by 2012 (For more Reuters DEALTALKs, click [DEALTALK/])

By Kim Yeon-hee

SEOUL, Nov 11 (Reuters) - South Korea may have to offer steep discounts to sell key state assets such as bank stakes, to help cut a growing fiscal deficit, while pumping money into the economy to pull it safely out of a global downturn.

The alternative is more delays, but the desperation for funds may be enough to override government fears of criticism for selling state assets on the cheap.

"The government will be more flexible, shifting away from its previous stance that it won't sell the stake below a certain price. That could mean a big discount," said one fund manager at a domestic asset management firm, asking not to be named because he is not authorised to talk to the media.