(LEAD) Seoul stocks dip 1.5 pct on renewed Sino-American trade tension

(ATTN: ADDS photo, bond yields at bottom)

SEOUL, Feb. 18 (Yonhap) -- South Korean stocks sank 1.5 percent Tuesday on news that the United States is considering imposing tougher trade restrictions on China. The Korean won sharply lost ground against the U.S. dollar.

The benchmark Korea Composite Stock Price Index (KOSPI) fell 33.29 points, or 1.48 percent, to close at 2,208.88. Trading volume was moderate at 464 million shares worth 6.3 trillion won (US$5.2 billion), with losers outnumbering gainers 670 to 180.

The index opened weak following media reports that the Donald Trump administration may restrict the use of U.S. chipmaking equipment to further pressure China's Huawei Technologies Co., which is already on Washington's blacklist for security concerns.

According to reports, U.S. may force global chipmakers using American-made equipment to obtain licenses before supplying their chips to Huawei.

Washington is also considering blocking exports of jet engines made by General Electric Co., which could limit China's efforts to develop its own passenger jets, according to the news.

"This is bad news and should be considered as a risk at a time when the market relies heavily on IT shares," said Ha In-whan, an analyst at Meritz Securities Co. "The U.S.-China trade war was somewhat forgotten following their phase one trade deal, but issues should be always monitored closely."

Institutional investors sold a net 527 billion worth of local shares, while foreigners dumped a net 305 billion won. Retail investors bought a net 766 billion won.

Most large caps stayed in negative terrain, with tech shares suffering a sharp drop.

Market kingpin Samsung Electronics plunged 2.76 percent to 59,800 won, while No. 2 chipmaker SK hynix dipped 2.86 percent to 102,000 won.

Leading carmaker Hyundai Motor slid 2.21 percent to 132,500 won, and auto parts maker Hyundai Mobis lost 1.46 percent to 235,500 won.

The country's No. 1 steelmaker POSCO slipped 0.46 percent to 217,500 won, while top chemical firm LG Chem sank 0.36 percent to 418,000 won.

The local currency closed at 1,189.5 won against the dollar, sharply down 5.6 won from the previous session's close.

Bond prices, which move inversely to yields, closed sharply higher. The yield on three-year Treasurys fell 4.9 basis points to 1.271 percent, and the return on the benchmark five-year government bond dropped 5.4 basis points to 1.381 percent.
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