Seoul shares end lower on N.K. missile concerns

South Korean stocks ended lower for a third straight session Wednesday as North Korea's test-firing of missiles added fuel to the geopolitical tension in the region, analysts said. The South Korean won fell against the U.S. dollar.

The benchmark Korea Composite Stock Price Index (KOSPI) fell 6.07 points, or 0.47 percent, to 1,279.85. Volume was light at 189 million shares worth 2.36 trillion won (US$2.49 billion), with losers leading gainers 541 to 203.

The index, which plummeted 1.96 percent with the market's opening, temporarily bounced back during the session, reaching an intra-day high of 1,286.28 on institutional and increased net foreign buying.

The 100-share, blue-chip KRX 100 lost 12.40 points, or 0.46 percent, to 2,655.00, and the tech-heavy KOSDAQ index tumbled 9.85 points, or 1.68 percent, to 575.98.

The local currency ended at 946.70 won to the greenback, down 1.50 won from Tuesday's close, as Pyongyang's military action prompted dealers to convert their won into dollars.

"North Korea's missile provocation seems to have prompted retail and foreign investors to dump shares and seek safer investment vehicles," said Park Seok-hyun, an analyst at Kyobo Securities Co.

South Korean defense officials confirmed that North Korea test-fired six missiles early Wednesday morning that landed off the western coast of Japan. North Korea has not officially announced the launches.

However, market observers said the impact of the North's military action on the market is expected to be of short duration because of the economy's stable fundamentals.

Earlier in the day, South Korea's Finance Minister Han Duck-soo made a rosy 5 percent growth forecast for the country's economy this year, despite higher oil prices and a firmer won versus the U.S. dollar.

Vice Finance Minister Bahk Byong-won also said after an emergency meeting with top economic policy makers that the local market aftermath from Pyongyang's previous missile launch in 1998 lasted for only a short period of time.

"The North's missile test-launches will have a negative impact on the economy in the short term, but if history is any guide, its impact on the real economy will be limited," said Lim Kyeong-muk, a researcher at state-run Korea Development Institute.

The nation's second-largest electronics producer LG Electronics tumbled 3.34 percent to 55,000 won, while chip heavyweight Hynix Semiconductor went down 0.49 percent to 30,450 won.

Transportation equipment shares saw heavy losses as a partial strike at top automaker Hyundai Motor sent its shares down 0.77 percent to 77,600 won. Its auto parts affiliate Hyundai Mobis tumbled 3.75 percent to 76,900 won.

The bellwether index's downward movement for the third straight session weighed on brokerage houses. Leading securities company Samsung Securities shed 0.19 percent to 51,700 won.

Despite the bearish market, top steelmaker POSCO climbed 0.40 percent on news that it plans to invest 90 billion won (US$95 million) in three of its plants to boost production capacity.

Market leader Samsung Electronics, after a wavering session, also managed to rise 0.33 percent to end at 603,000 won, thanks to strong institutional buying.

On the currency market, the won started weaker against the U.S.

currency as jittery investors dumped the local currency to buy the greenback. However, the won's fall was curbed by market sentiments that Pyongyang's provocation will have a minute effect on the local economy, analysts said.

Bond prices, which move inversely to yields, rose sharply. The return on the benchmark three-year Treasuries fell 0.04 percentage point to 4.85 percent, with the yield on five-year government bonds losing 0.03 percentage point to 4.97 percent.

Seoul, July 5 (Yonhap News)