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(LEAD) S. Korean shares fall on U.S. rate woes

All News 15:57 October 05, 2016

(ATTN: ADDS bond yields at bottom)

SEOUL, Oct. 5 (Yonhap) -- South Korean stocks closed slightly lower on Wednesday as rising expectations of an interest rate hike in the U.S. and the possible tapering of the European Central Bank's bond buying program sapped investor sentiment. The Korean won fell against the U.S. dollar.

The benchmark Korea Composite Stock Price Index (KOSPI) lost 1.86 points, or 0.09 percent, to close at 2,053. Trade volume was slim at 289.99 million shares worth 4.22 trillion won (US3.78 billion), with losers outnumbering gainers 446 to 347.

Local shares started off on a weak note as investors fretted about the prospect of a Federal Reserve interest rate hike in the coming months, following hawkish comments from Fed officials.

The rising expectation that the European Central Bank (ECB) was withdrawing its bond buying program also bruised investor confidence.

"Hawkish comments from Federal Reserve officials raised expectations that an interest rate hike could come at an earlier-than-expected date," Suh Sang-young, an analyst at Kiwoom Securities, said. "Investors took to the sidelines on signs of the tapering of quantitative easing measures."

Foreigners and institutions offloaded a net 2.12 billion won and 110.44 billion won, while retail investors bought a net 100.55 billion won.

Korea Electric Power Corp., the state-run power provider, retreated 1.28 percent to 53,800 won, and leading steelmaker POSCO edged down 0.65 percent to 230,000 won.

Cosmetic shares were down, with No. 1 AmorePacific shedding 1.39 percent to 389,000 won and its smaller rival LG Household & Healthcare falling 3.7 percent to 937,000 won.

In contrast, tech shares rose ahead of the third-quarter earnings season.

Market bellwether Samsung Electronics edged up 0.31 percent to 1,619,000 won and chip giant SK hynix rose 1.91 percent to 42,600 won to touch this year's high on the upbeat prospect of its third-quarter earnings.

Samsung SDS, an IT unit of Samsung, jumped 7.62 percent to 162,500 won.

The local currency closed at 1,113.7 won against the U.S. dollar, down 5.9 won from Tuesday's close.

Bond prices, which move inversely to yields, closed lower. The yield on three-year Treasurys added 4 basis points to 1.316 percent and the return on the benchmark five-year government bond gained 4.5 basis points to 1.329 percent.

ejkim@yna.co.kr
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