* KOSPI tumbles 2.7 pct, one large trade blamed for move
* Single trade leads to record foreign net share selling
* Traders cite programme selling by Deutsche Bank
* Samsung Electronics drops 2.9 pct as large caps hit
* Some suspect index futures arbitrage behind the trade
By Jungyoun Park
SEOUL, Nov 11 (Reuters) - South Korea's stock market tumbled nearly 3 percent on Tuesday, taking a hit from what traders said was a single trade by Deutsche Bank that drove the market sharply lower in the last minute of trade.
The share sale was estimated to be about $1.5 billion, with
traders saying that it appeared to be computer-driven programme
transaction from Deutsche Bank's
About a dozen traders and analysts said Deutsche was behind the massive share dump that propelled turnover to 9.3 trillion won ($8.4 billion) -- the most in 18 months. Deutsche declined to comment.
Some market watchers said the expiry of KOSPI futures and options likely played a role in the sudden move.
The large trade led to a record 1.3 trillion won ($1.2 billion) net sale of shares by foreign investors, the biggest since the Korea Stock Exchange began compiling data in 1998.
According to the Thomson Reuters trade log of exchange data, a single trade made up about 14 percent of total KOSPI volume for the day and went through in the last minute of activity. That single transaction caused a 2.4 percent drop in the index to 1,916.57.
Y.S.Rhoo, a market analyst at Hyundai Securities, said "massive programme selling" was behind the drop.
The benchmark KOSPI <.KS11> finished down 53.12 points, or 2.7 percent, at 1,914.73 points, hitting a two-week low.
December KOSPI 200 futures
Some traders suspected that an index arbitrage trade between futures and the cash market was behind the transaction, and it may have been a rollover of such a position.
One index futures trader in Hong Kong said it appeared that the arbitrage had involved selling November KOSPI futures in the over-the-counter market against a long position of cash stocks. So with Thursday's futures expiry, the player dumped those cash share holdings.
The trader said that as a result, the cash KOSPI index is likely to pop higher on Friday and December futures would likely reatreat.
Falls were led by key large cap issues, with Samsung Electronics <005930.KS>, the largest share on the KOSPI and the world's No.1 memory chip maker, shedding 2.9 percent. Shares in Hynix Semiconductor <000660.KS>, the world's No.2 memory chip maker, lost 2 percent.
Shares in Hyundai Motor <005380.KS>, the country's biggest automaker and the third-biggest counter on the KOSPI, fell 4.6 percent, while POSCO <005490.KS>, the second-biggest stock on the KOSPI, lost 4 percent.
Banks also lost ground, with KB Financial Group <105560.KS>, the parent firm of South Korea's biggest commercial lender Kookmin Bank, down 4.8 percent.
But shares in Hyundai Merchant Marine Corp <011200.KS> jumped 8 percent amid market talk that Hyundai Group may have lost its partner in pursuit of Hyundai Engineering & Construction <000720.KS>.
"There is talk that Germany's M+W Group has decided to back out, and this strengthens the possibility Hyundai Motor affiliates would win the deal," said an analyst who declined to be named due to the sensitivity of the issue.
"Speculation is, a management battle over Hyundai Merchant may be sparked, as Hyundai E&C owns a substantial stake in the shipping firm," he added.
Hyundai E&C controls 8.3 percent of Hyundai Merchant & Marine, one of the key units of Hyundai Group. Hyundai Heavy Industries <009540.KS>, in which Hyundai Motor Group chairman's brother controls a major stake, owns 17.6 percent.
(Additional reporting by Vikram S. Subhedar and Michael Flaherty in Hong Kong; Editing by Kim Coghill)