Seoul shares rebound on rate cut

(ATTN: RECASTS lead; ADDS bond yields at bottom)
SEOUL, Nov. 7 (Yonhap) -- South Korean stocks jumped 3.87 percent Friday on
expectations the central bank's rate cut may help head off a deeper economic
slump, analysts said. The local currency inched up against the U.S. dollar.
The benchmark Korea Composite Stock Price Index (KOSPI) advanced 42.27 points to
1,134.49, rebounding from an early 4.9 percent slide. Volume was heavy at 839
million shares worth 6.85 trillion won (US$5.15 billion), with gainers outpacing
losers 685 to 171.
"The market started sharply lower on overnight Wall Street plunges but the index
reversed course after the central bank's rate-cut decision, with institutions
expanding their purchases," said Choi Soon-ho, an analyst at Eugene Investment &
Securities. "This is a significant bounce-back as the index climbed over 8
percent from its intra-day low."
Earlier in the day, the Bank of Korea joined global efforts to minimize the
fallout from the global financial turmoil on the real economy. It slashed its key
interest rate by 0.25 percentage point to 4 percent, the lowest level since
February 2006, marking the third cut in less than a month.
Lower borrowing costs benefited financial and building shares. Woori Finance
Holdings rose 5.44 percent to 7,360 won and Shinhan Financial Group jumped 6.59
percent to close at 36,400 won.
Top builder Daewoo Engineering & Construction surged 8.47 percent to 10,250 won
while Kumho Industry advanced 8.59 percent to 13,900 won after falling by its
maximum daily limit of 14.95 percent the previous day.
Steel and auto exporters also gained significant ground. Top steelmaker POSCO
rose 2.8 percent to 331,000 won and No. 1 carmaker Hyundai Motor surged 11.22 per
cent to 54,500 won.
Telecoms, however, closed down, with top mobile carrier SK Telecom falling 1.14
percent to 217,000 won. Fixed-line telecom giant KT was down 0.29 percent to
close at 34,300 won.
The won ended at 1,328.8 won to the greenback, up 2 won from Thursday's close, as
banks and exporters unloaded the greenback, helping the local currency rebound
from an early plunge. At one point, the won fell as low as 1,369.
Bond prices, which move inversely to yields, ended sharply lower. The return on
three-year Treasuries jumped 0.17 percentage point to 4.72 percent and the
benchmark yield on five-year government bonds also rose 0.18 percentage point to
4.94 percent.
kokobj@yna.co.kr
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