Sept. 10 (Bloomberg) -- Korea Development Bank said it ended talks to buy a stake in Lehman Brothers Holdings Inc., the U.S. securities firm under pressure to seal an agreement for a capital infusion, after failing to agree on terms.

Korea Development also ended discussions ``in consideration of financial market conditions at home and overseas,'' the Seoul- based bank said today in an e-mailed statement, without elaborating. Chief Executive Officer Min Euoo Sung said on Sept. 2 that the talks with the fourth-biggest U.S. securities firm were caught in a price dispute.

The end to the talks increases pressure on Lehman, which fell 45 percent in New York trading yesterday. The U.S. firm will report third-quarter results and disclose ``key strategic initiatives'' today, a week earlier than planned. State-run Korea Development had been seeking to buy the stake to advance a goal of becoming Asia's third-biggest bank within five years.

``I am not sure whether it's the right thing to do for them at this point,'' said David Marshall, managing director at Fitch Ratings in Hong Kong, commenting on Korea Development Bank's interest in investing in Lehman. ``It really needs to work on its own privatization.''

Korea Development Bank, set for an initial public offering next year, needs to get regulatory approval for any sizeable investment it makes.

The MSCI World Finance Index fell following the Korea Development announcement, after climbing as much as 0.4 percent. The gauge traded 0.1 percent lower at 4:35 p.m. in Hong Kong.

Korea Development Bank's move to invest in Lehman faced resistance from South Korea's regulators, who warned of risks of buying global banks, raising concerns about more finance-industry losses. Jun Kwang Woo, chairman of the Financial Services Commission, said on Sept. 8 that the Korean firm should question whether the ``move makes sense in the long term.''

To contact the reporter on this story: Bomi Lim in Seoul at blim30@bloomberg.net; Seonjin Cha in Seoul at scha2@bloomberg.net

Last Updated: September 10, 2008 05:02 EDT