(Recasts throughout, adds markets)
* Sept exports likely to fare best in 11 months-customs
* South Korea may be first G20 economy to tighten
* Asset bubbles, not inflation, to be driving factor
* Markets price in rate rise in 2009 at earliest
By Yoo Choonsik
SEOUL, Sept 21 (Reuters) - South Korean exports are poised to fare the best in 11 months in September and look set to gain further, providing an already hawkish central bank with more ammunition to raise interest rates as early as this year.
The Customs Service forecast based on Sept. 1-20 data published on Monday reinforces investor expectations that the Bank of Korea may become the first G20 central bank to raise rates since the global financial crisis culminated in the collapse of Lehman Brothers a year ago.
The figures also came amid growing tension between the central bank and the government of President Lee Myung-bak, which has repeatedly said Asia's fourth-largest economy was still too fragile to cope with higher interest rates.
Key 3-month borrowing rates rose to their highest closing levels in more than seven months and the won rose to its strongest in 11 months against the dollar, both partly influenced by the upbeat export figures.
The Korea Customs Service forecast exports in September September would fall 10.4 percent from a year earlier to around $33.5 billion, the slowest annual decline since October 2008, while imports would fall 26.6 percent to around $29.0 billion. (For a graphic, double-click: http://graphics.thomsonreuters.com/099/KR_EXPR0909.gif)
G20 COORDINATION
The forecasts suggest average exports value per working day would rise to an 11-month high of $1.40 billion in September from a revised $1.26 billion in August, Reuters calculations showed.
"The September figures support our view that the South Korean economy is on a sustained recovery path, and they will also strengthen the Bank of Korea's confidence in the economy," said Lee Sang-jae, an economist at Hyundai Securities.
"The data alone won't bring about a huge change in the interest rate policy but will clearly be an additional factor to rate increases," he said.
Separately, a business lobby said its survey index on exporter sentiment rose to 131.5 for the fourth quarter, the highest since early 2004, from 108.5 in the third quarter.
A reading above 100 means most exporters expect business conditions to improve, the Korea International Trade Association (KITA) said in a statement.
Bank of Korea Governor Lee Seong-tae said on Sept. 10 the central was ready to begin raising interest rates and become the first Group of 20 central bank to do so, if the domestic property and mortgage boom continued.
But growth remains the priority for President Lee Myung-bak's government and his team has repeatedly it was too soon for a rate rise given that demand for South Korea's exports from advanced economies has not yet fully recovered.
President Lee has said any shift in policies pursued by leading economies should be done in close coordination with each other.
Lee, who attends the G20 summit in Pittsburg this week, reaffirmed his call for international policy coordination in a statement posted on the G20 Information Centre website on Sunday.
The central bank has held its benchmark 7-day repurchase agreement rate steady for the past seven months at a record-low 2.0 percent after reductions totalling 3.25 percentage points between last October and February this year.
It next reviews the rate on Oct. 9. (Additional reporting by Cheon Jong-woo; Editing by Jonathan Thatcher and Tomasz Janowski)