Seoul shares soar on Fed chairman's comments, program buying

South Korean stocks closed over 3 percent higher Thursday from a combination of massive program buying, a three-day fall in oil prices and hopes of a pause in the U.S. rate increase cycle. The South Korean won gained against the U.S. dollar.

The benchmark Korea Composite Stock Price Index (KOSPI) rose 39.65 points, or 3.21 percent, to 1,273.30. Volume was moderate at 208 million shares worth 2.92 trillion won (US$3.07 billion), with gainers leading losers 630 to 135. The blue-chip KRX 100 index gained 85.00 points, or 3.32 percent, to 2,643.70, and the tech-laced KOSDAQ index rose 14.10 points, or 2.61 percent, to 553.91.

The local currency ended at 951.90 won, up 5.90 won from Wednesday's close, due to the dollar's global weakness sparked by U.S. Federal Reserve Chairman Ben Bernanke's comments overnight suggesting a pause in the Fed's credit-tightening campaign.

"Global markets staged a brisk rally after Bernanke's comments on inflation. A drop in oil prices for a third successive session also gave a boost to global markets," said Kim Jung-hyun, an analyst at Goodmorning Shinhan Securities Co.

Kim Yong-gak, an analyst at Hyundai Securities Co, said heavy program buying triggered by foreign purchases of large amounts of futures was a catalyst for pushing the market higher.

In congressional testimony on Wednesday, Bernanke forecast that core inflation would moderate in the coming quarters, prompting the market to speculate that the Fed will move to end its two-year credit-tightening campaign in the near future.

U.S. crude oil for August delivery fell 88 cents to settle at $72.66 a barrel on the New York Mercantile Exchange on Wednesday.

Powered by foreign buying, top lender Kookmin Bank rose 6.57 percent to 77,800 won and No. 2 financial service company Shinhan Financial Group gained 2.85 percent to 45,000 won.

Tech giant Samsung Electronics advanced 3.10 percent to 598,000 won on improved investor sentiment from Bernanke's comments.

Chip heavyweight Hynix Semiconductor added 2.62 percent to 31,300 won and the world's largest liquid crystal display manufacturer LG.Philips LCD rose 5.31 percent to 33,700 won, helped by an assessment that their stock prices hit bottom.

Leading air carrier Korean Air advanced 3.76 percent to 30,350 won and its smaller rival Asiana Airlines 3.11 percent to 5,950 won as oil prices stabilized. On the currency market, the won opened sharply higher versus the dollar on Bernanke's comments, but the won's upswing was capped by dollar buying by investors, dealers said.

Bond prices, which move inversely to yields, rose sharply. The return on the benchmark three-year Treasuries fell 0.03 percentage point to 4.86 percent, with the yield on the five-year government bonds down 0.03 percentage point to 4.96 percent.

Seoul, July 20 (Yonhap News)