HSBC says pulls out of KEB deal

SEOUL (Reuters) - HSBC Holdings said on Friday it had dropped its offer to buy a 51 percent stake in South Korea's Korea Exchange Bank from U.S. private equity firm Lone Star.

"Taking into account all relevant factors including current asset values in world financial markets, on 18 September 2008 HSBC Asia exercised its right to terminate the acquisition agreement with immediate effect," the bank said in a statement.

HSBC in September 2007 agreed to buy the stake for $6.3 billion (3.4 billion pounds).

(Reporting by Kim Yeon-hee; Editing by Keiron Henderson)