UPDATE 1-S.Korea Says Don't Panic after U.S. Rating Cut

(Updates with statement)

* U.S. rating cut won't deter S.Korea economic growth -vice fin minister

* S.Korea's trust in U.S. Treasures has not changed

SEOUL, Aug 7 (Reuters) - South Korean policymakers on Sunday played down any likely impact on the economy following the downgrade in U.S. credit ratings and told local investors not to panic when financial markets reopen.

Global policymakers held an emergency conference call on Sunday to discuss the twin debt crises in Europe and the United States that are causing market turmoil and stoking fears of the rich world sliding back into recession.

"It (the Standard and Poor's cut in the U.S. credit rating) will have a limited impact on our economy, thus our judgement is that local financial markets do not need to overreact to it," Vice Finance Minister Yim Jong-yong told a briefing after an emergency economic meeting.

He said the U.S. rating cut would not derail the current growth pattern in the export-led economy, considering its reduced dependence on U.S. and European markets and resilient industrial output and employment data.

The emergency meeting, attended by senior officials from the finance ministry, Bank of Korea and the financial watchdog and a financial regulator, came before the Bank of Korea reviews its policy rate on Thursday.

Officials agreed to discuss measures if needed, Yim added.

Meanwhile, the government will continue to put policy priority on fighting inflation and will not change its macro economic policies, the ministry said in a statement.

Separately, Deputy Finance Minister Choi Jong-ku told Reuters that South Korea's trust in U.S. Treasuries has not changed, after a conference call with other G20 finance deputies.

"I expressed our country's position at the call that there will be no sudden change in our reserve management policy," Choi said, referring to the heavy weighting of U.S. bonds in the country's more than $300 billion in foreign reserves.

"There's no alternative (to U.S. government bonds) that provides such stability and liquidity," he added, declining to elaborate on the G20 discussion. (Reporting by Kim Yeonhee and Yoo Choonsik, editing by Jonathan Thatcher)