Friday, November 26, 2010

Seoul shares fall; caution before military drill

SEOUL:'' Seoul shares extended losses and fell 1.3 percent on Friday, Nov 26, weighed down by growing caution in the run-up to scheduled joint U.S.-South Korean military drills this weekend and by declines in banks such as Hana Financial Group Inc <086790.KS>.

The Korea Composite Stock Price Index <.KS11> (KOSPI) ended down 1.34 percent at 1,901.80 points.

North Korea said on Friday that impending military exercises by South Korea and the United States are pushing the region towards war, days after it launched its heaviest bombardment since the 1950-53 Korean War.

China expressed concern about the exercises with the United States, and a foreign ministry spokesman refrained from singling out Pyongyang as being responsible for the exchange of artillery fire with South Korea.

"Investors are growing more jittery ahead of the joint military exercise. The key concern is, whether North Korea will again take unforeseen, rash actions," said Kim Hyoung-ryoul, a market analyst at NH Investment & Securities.

Institutions were buyers of a net 12.2 billion won ($10.69 million), and foreign investors were buyers of a net 54 billion won.

Shipbuilders advanced, with Daewoo Shipbuilding & Marine Engineering <042660.KS> gaining 2.3 percent on a report that the company was picked as preferred bidder for a $4 billion container ship order from Denmark's A.P. Moeller-Maersk AS .

The company declined to comment on the report.

STX Offshore & Shipbuilding <067250.KS> gained 1.2 percent.

Hana Financial Group Inc <086790.KS> fell 4.1 percent after the group outlined plans to fund the $4.75 trillion won ($4.1 billion) purchase of a controlling stake in Korea Exchange Bank <004940.KS> through retained earnings, debt and investment.

"Its shares have risen substantially since November on KEB acquisition expectations, and we are seeing profit-locking moves," said Sohn Joon-beom, an analyst at LIG Investment & Securities.

Hana Financial had gained 22.2 percent since mid-November as of Thursday's close.

"How Hana will fund the buyout is still very much unclear," Sohn added.

Korea Exchange Bank finished down 3.3 percent.

Falls in TECHNOLOGY [] stocks also weighed as investors awaited U.S. Black Friday sales figures.

Hynix Semiconductor Inc <000660.KS>, the world's No.2 memory chip maker, fell 2.2 percent. LG Display Co Ltd <034220.KS>, the world's second-biggest flat panel maker, shed 2.3 percent.

Trading volume was 452.7 million shares worth 5.7 trillion won, compared with average daily trading volume and turnover of 326.7 million shares worth 6.5 trillion won in October.

The KOSPI 200 Dec futures index fell 3.2 points to 250.30. The KOSPI 200 spot index <.KS200> shed 3.14 points to 249.31.

The junior Kosdaq market <.KQ11> fell 2.9 percent to 493.56. - Reuters

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