  We discuss the role of many-body spin correlations in nonlinear optical
response of a Fermi sea system with a deep impurity level. Due to the Hubbard
repulsion between electrons at the impurity, the optical transitions between
the impurity level and the Fermi sea states lead to an optically-induced Kondo
effect. In particular, the third-order nonlinear optical susceptibility
logarithmiclly diverges at the absorption threshold. The shape of the
pump-probe spectrum is governed by the light-induced Kondo temperature, which
can be tuned by varying the intensity and frequency of the pump optical field.
In the Kondo limit, corresponding to off-resonant pump excitation, the
nonlinear absorption spectrum exhibits a narrow peak below the linear
absorption onset.
