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(LEAD) S. Korean shares close higher on improved investor sentiment

All Headlines 16:02 October 10, 2016

(ATTN: ADDS bond yields at bottom)

SEOUL, Oct. 10 (Yonhap) -- South Korean shares closed slightly higher Monday as continued anticipation of favorable third quarter earnings boosted investor sentiment here, analysts said. The local currency also gained ground against the U.S. greenback.

The benchmark Korea Composite Stock Price Index (KOSPI) closed at 2,056.82, adding 0.15 percent or 3.02 points. Trading volume was slim at 309 million shares, worth 4.56 trillion won (US$4.11 billion) with gainers outnumbering losers 451 to 357.

Institutional investors were sole net purchasers, scooping up 333.5 billion won worth of local shares, while foreign investors sold a net 42 billion won. Retail investors offloaded a net 289.4 billion won.

The index opened sharply lower as investors apparently sought to cash in early gains after market bellwether Samsung Electronics closed at a record high of 1,706,000 won Friday.

Samsung shares plunged 1.52 percent to 1,680,000 won on Monday as a report of the tech giant temporarily suspending its production of the Galaxy Note 7 smartphone also spooked investors.

Samsung is currently undertaking a voluntary global recall of the smartphone for battery-related problems that may cause the battery to catch fire under certain conditions.

"We will have to see how the issue plays out, but if the issue does not get drawn out, Samsung Electronics shares may quickly rebound as outlook on the company's fourth-quarter earnings is not too bad," Hyundai Securities analyst Bae Sung-young said.

Bae insisted the KOSPI too has room to grow, noting many local firms are also expected to report better-than-expected results in the third quarter.

Top portal operator Naver surged 3.44 percent to 872,000 won, while global steelmaker POSCO added 1.33 percent to 229,000 won.

Local industry leader Hyundai Motor lost 2.20 percent to 133,500 won after the government filed a complaint with the prosecution against the carmaker for hiding problems related to air bags installed in its cars to avoid making a recall.

The local currency closed at 1,108.40 won against the U.S. dollar, up 7.10 won from Friday's close.

Bond prices, which move inversely to yields, closed lower. The yield on three-year Treasurys rose 0.9 basis point to 1.335 percent and the return on the benchmark five-year government bond added 3.5 basis points to 1.378 percent.

bdk@yna.co.kr
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